The never lived in it part does not govern whether the gain is long term or short term. That's determined by when they bought it.
The fact that they never lived in it,, only means they don't qualify for the rule that allows an exclusion (up to $500,000 for a couple) of the capital gain of a primary residence.
Also. when making a gift of a capital asset, you shift the capital gain to the recipient, at a later date. But because the daughter will use it as her primary house, she will be eligible for the $500,000 exclusion.
