Co-owners Qualify for Full Exemption

The tax court ruled that co-owners of a principal residence are eligible for full $500k exemption ($250k each) just like married couples provided each had lived at the home 2 years out of the 5 years prior to the sale. The IRS auditor had allowed $125k each (Hsu v. Commissioner of Internal Revenue , Tax Court  Summary Opinion 2010-68).  Currently the law allows up to $250k for singles, and $500k for married couples to be excluded from gains of the sale of a principal residence.real estate taxation