Legally, sweat equity rarely counts unless you draft a that values labor at a billable rate. Without that clause, the 40% owner is just a tenant who happens to have a deed.

But here is the kicker: Under Section 121, a married couple can exclude $500,000 in gains. Unmarried co-owners? Each gets only $250,000 of exclusion on their share of the gain.

It demands more paperwork than a marriage. More spreadsheets than a small business. More honesty than most relationships can withstand.