My spouse has passed away, and we owned a principal residence together. I have heard about a tax allowance on the principal residence. Is this correct?

Yes. Article 764 bis of the French General Tax Code provides that, for the purposes of the inheritance tax return, a 20% allowance is applied to the market value of the deceased’s principal residence, provided that the property is occupied by certain specified persons, in particular the surviving spouse on the date of death (BOI-ENR-DMTG-10-40-10-30 §10).