In order to claim the $500,000 exclusion for both the widow and her spouse, the sale must be completed within two years of the spouse‘s death. In this case, your mother will only qualify for a $250,000 exclusion.
However, as noted, she received a partial step up in basis when her spouse died, or a full step up in basis, if they live in a community property state. You can also reduce the capital gains by documenting as many adjustments to basis as you can, such as improvements made to the home over the years.
