Cap Tax Gain exemption

[Pawel Bronski]

I’m working out off market deal with seller that is worry about capital tax gain (NY). However his odd situation might plays on his favor.. some background: 
He owns the place since 1990 (bought for $14k). Lived at the place for many years. Renting it out for more than 10 year and probably for more than 3 years have been renting out without a lease (month to month cash). Claiming that his wife (co-owner) lives there all utilities under her name. 
Is there a chance he can claim the tax gain exemption? 
How do you apply for that? Any special form or something? 
(The deal we are working out in range of +\-$40k. )

Thanks for input