You might be right on that point, it is the DEED that determines joint ownership and he too would be entitled to his share of Capital Gain Exclusion. I am not sure how they are filing their tax return, but, I suspect if they filed separate, both would report their 50% of the gain on their respective tax returns and elect to claim the 50% Capital Gains Exclusion available on residence.
Hopefully, they exclusion amount of $250,000 to each spouse would presumably offset any capital gains subject to tax, resulting in a Zero Tax due as far as gain on the sale of the principal residence.
Just a note, just check that they meet the Residence Test! Please refer to this article below.
Sale of Principal Home
