$250K Home sales tax exemption

[Jason Shim]

My wife and I are thinking of selling our primary residence in 2-3 years.  we live here for 20 years.  If the market continues the way it is, we are looking at a $1mn gain in 2-3 years.  if we sell today, our gain is well over $500K.   here are my questions

1)  if my brother and her wife move in to our house and we transfer 50% of the title to them, and if me+brother sell the house in 2-3 years, will each couple qualify for $500K exclusion? 

2)  I heard the max exclusion is $500K per house.  if this is true, I plan to sell the house to my brother now and let them sell the house again in 2-3 years.

I have a loss carry forward of $200K from my previous business dealings.  if I sell my house in 2016 and gain $500K, will I have to apply the $200K loss carry forward to offset the $500K first, meaning I will not enjoy the full $500K exclusion?  or can I exclude the $500K first, then apply any further gain/my income towards the loss carry forward?

Thank for the advice

[Dave Foster]

@Jason Shim, there's another scenario that may or may not have some appeal to you.  Since you've already lived in the house for 20 years you already qualify for the exemption.  So it doesn't matter when you sell or move out you have that maximum.  

But if you were to move out at any time and rent that house for a year or so, you've just created the ability for it to be treated as an investment property and do a tax deferred exchange on it.  As long as you converted it to a rental and then sold it within the next 3 years following (so that you could still claim you had lived in it for 2 out of the previous 5 years) you could get both the 500K maximum and the remainder would be tax deferred under a 1031 exchange.  

There's a ton of slightly different variations that could spin off of this based on your specific situation.