If you have joint title, and the IRS chooses to audit, they will assume by default that the capital gains should be apportioned 50/50, with your daughter getting the exclusion on her half, but you owing tax on your half. To rebut this presumption, you should gather documents that show that your daughter had the exclusive benefits of ownership, and accepted all the responsibilities of ownership. In other words, compile evidence showing that your daughter paid all the bills; performed all maintenance, repairs, lawn mowing, etc. (or paid 100% of the cost of those services provided by contractors etc); that your daughter claimed the mortgage interest and property tax deductions and you did not; that you never lived there (except for occasional temporary visits) and so on. Don't send proof with her tax return, but keep it on hand for 6 year after filing.
Also, the two of you need to make sure that if the closing agent issues a 1099-S reporting the sale, that the 1099 only includes your daughter's name and SSN and not yours.
