John and Sally each have owned a principal residence for several years. John and Sally were married last month, and will file a joint income tax return for the current tax year. John will sell his residence later this month, and Sally will sell her residence near the end of next month. Each residence has close to $250,000 of gain that will be realized on the sale.
May each spouse exclude $250,000 from their respective sales, or are they now limited to only one exclusion as a married couple filing jointly? Please explain your response.