Selling SFH, Capital Gain Exclusion

[Wes Y.]

This is my first post so forgive me if this wasn't the correct forum to post this question. My friend and her adult son have lived in a SFH together for about 20 years. During this time it has appreciated from about $250k to almost $1M. Her son is planning to move out of state for work, at which time she would like to downsize to a smaller home. She is not married so her capital gains exclusion is only $250k. This leaves here with almost $500k in capital gains to pay tax on.

I'm trying to find creative ways in which she can minimize this tax burden.  She has two sons which she intends to leave hers estate to.  It is my understanding that gifting a property does nothing to step up basis as the capital gains would follow the gift.  However, could she gift half the property to the son who lives with her, which would allow them each to use their own separate $250k capital gain exclusion?  Or would the son have to own his half of the home for two years prior to selling in order to qualify for the exclusion?

The second son is married but has not lived in the home at any point during the last 20 years so this doesn't seem to present any options for savings.

I thank everyone in advance for your thoughts.  If I've left out any important needed details please let me know.