Once the owners that were exempt from the restriction sell, that unit may not function as a STR with the new owners3. 

Married Couple plus 1 Single person own jointly, selling longterm primary residence for $1M.Who gets the capital gains exemption(s) and how is it applied evenly across all 3?!

If you live in the property for 2 of the last 5 years you are eligible for exemption on the capital gains of your home.

@Arnold BaghomThis would apply to ADUs unless it falls under one of an applicable list of exemption circumstances.

A couple of items to consider:Does that cash flow number include the increase in property taxes that will happen when you lose your homestead exemption? 

You'll know enough when you can define the following:Riparian rights, homestead exemption, eminent domain, mortgagee/mortgagor, statute of frauds, tenants in common, quit claim vs warranty deed, Garn/St Germain Law, sq feet in an acre, right of first refusal, bundle of rights, fee simple, and the statute of limitations.Wait--never mind. 

I recently read that IRS successfully challenged a homeowner's sec 121 exemption.

One for surviving spouse in a survivors' trust, one for an exemption trust of the deceased up to exempt amount, and the balance to a survivor trust .

Question is is the seller exempt from compliance?

But, seller financing might be best for the seller as they will have a heck of a tax gain from thier basis since the 30s, unless they are exempt.