A Scenario Related to Capital Gains Exclusion

[Arthur C.]

Hey guys!

Hope this post finds you well!

Anyway, I've come up with a scenario where I am starting to wonder if it is doable and completely legal related to capital gains exclusion rule. If my business partner and I find a property in DC zone as RF-1, which enables a single family home conversion into two condo units as a matter of right. In terms of taxability, from my understanding, if my business partner and I are to live in the property for at least two years, there will be capital gains exclusion up to $250K for each of us. So, if we live in the property as a single family home for at least two years then move to other place while doing a full conversion of two condo units (each unit will have its own respective legal unit #) then do we get capital gains exclusion of $500K ($250K each for me and my business partner) off the sale of these two condo units in total? I am thinking that should be allowed since it is originally a single family home and as long as we live in it for at least two years, we should be able to absorb up to $500K capital gains exclusion from the sale of these two condo units. 

Your thoughts?

Thanks,
AC