It doesn't matter if the proceeds were more than $500,000 because the proceeds were shared by your wife's brother. She would just report her 1/2 of the proceeds and 1/2 of the basis amount on the condo to report in Turbo Tax.
If your wife met the ownership and use test, capital gains will be excluded as SusanY1 has mentioned. To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:
- Owned the home for at least two years (the ownership test)
- Lived in the home as your main home for at least two years (the use test)
@chamanirad
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