Living in a reno while the kitchen is unusable while doing the flip yourself will test a any marriage, especially newly married people.

You can exclude gains up to $500k if you're married, $250k if single.

A 1031 exchange is NOT available for owner occupied property so that’s the bad news.The good news is for owner occupied primary residences, for married couples, the first $500,000 of pain is tax free.No need to worry about a 1031, live in the house, sell it, use the $500,000 exclusion and you pay KP tax on whatever profit may exist,2.

I’m in a different situation with no kids and not married but I would still urge you to find a way to pay off CC debt.  

Since you have lived in the property for two out of the previous five years you could take the first $500k of the gain tax free (as a married couple).

If married you can exclude $250,000 each in capital gains if your primary residence.  

Both claim they were married to the borrower via Texas’s common law marriage rules.

Are you getting married or do you like wine? 

If you move into a property acquired through a 1031 exchange and make it your primary residence, you may qualify for the capital gains exclusion under Section 121 (up to $250K single/$500K married) if you live in the property for at least two of the last five years before selling.However, gains attributable to the time it was a rental property remain taxable (non-qualified use), and depreciation claimed during the rental period must be recaptured at a 25% tax rate.

I'm ASSUMING (a bad idea, I know) that they were a married couple and had joint ownership.