Capital Gains Scenario - Looking for advice

[Trevor Morris]

New to BP forums and looking forward to start making connections!

I have a scenario that I am looking for some tax EXPERT guidance on what the rules are for capital gains on a co-owned property, and best way for this to play out.  

Currently we co-own a vacation property with my in-laws with which we have been using for our primary residence for 4 years.  We just bought a different house which needs significant renovation, but we should be done with it and moving into it by next summer.  The vacation property was purchased in 2017 for $500k and currently valued at $1.3mil.  In a scenario where we sell the property (for round numbers purposes not including fees and closing, I have rounded the numbers as is) the profit is $800k , because it has been our primary residence for the last 4 years, are we still sheltered from $500k in capital gains?  How does this work for the other co-owner of the property that does not live here as a primary residence?  Are we all subject to capital gains on just the $300k?  Any guidance on how this works would be great.

As a follow-up to this, once we move next year I would like to scale my portfolio very quickly. I am open to BRRRR, flips, STR, and small/large multifamily. Any advice on the best way to use this capital moving forward? We have discussed the option of selling to get the equity out of 'co-ownership' so that we can use the capital to pursue other opportunities. But the big capital gains questions linger here. We have also discussed keeping the property as a rental and just utilizing a HELOC to pursue other deals with the equity in it - there can be downsides to this too. Cash out refinance is an option as well, but it is not very appealing at this time (background here is $330k left on mortgage at 2.65% rate).

Any guidance or options to consider to any or all pieces of this would be appreciated!