Situation:  Owner sells a 4 unit.  Years ago they opened a stairwell to combine two of the units and live in both.  So they are technically living in two of the units and renting out the other two and have been there for 5+ years.

Question: Would only 25% of the gain from sale be excluded in this scenario or would they be able to exclude 50% of the sale as they have lived in two of the 4 units for the past 2+ years.  The property is also jointly owned by the spouses if that makes any difference.

I've never dealt with this scenario before and would appreciate any insight.