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A homeowner who becomes physically or mentally incapable of self-care and resides in a licensed care facility such as a nursing home is deemed to have resided in the home the time she lived in the home during the last 5 years plus the time she was in the nursing home.
If your mother meets the above paragraph and she lived in the house at least one year out of the last 5 years ending on the date of the sale of the home, she can exclude up to $250,000 (or $500,000 if married filing joint) of any gain on the sale. If she does not meet this rule, then she would have to pay capital gains tax on any gain amount.
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Yes, based on these dates, she must have been in her home over 1 year out of the last 5 years, so she qualifies for this one year rule since she moved into a nursing home. So yes, she can exclude up to $250K of the gain.
(note: for most people, the usual residence test is 2 years out of the last 5).