Sale of rental property with multiple owners

My in-laws owned a house that they rented out as much as possible over the past 25+ years.   They made very little income from the property and struggled to get tenants that would pay consistently.  Finally convinced them to sell last year.   Entering the sale into Turbo Tax shows that a large capital gain tax is due.   This seems crazy since the house was owned for so long and generated very little income.   I have read on this site that there is some kind of exemption that may apply.   Is anyone familiar with this?

The other issue is that the rental property was managed by my father-in-law and he handled any costs and collected any rent payments.   However, my wife has always been listed as on of the three owners of the property, along with her parents.   When the property sold, my wife was issued a check for 1/3 of the proceeds.   For tax purposes, how do I report the proceeds from the sale on my in-laws taxes, and on mine?   Do I report 2/3 to my in-laws and 1/3 to my wife?    On my in-laws taxes, Turbo Tax shows depreciation for the years of renting this property, so almost all the proceeds are treated as gains.   We have never reported anything related to this property on our taxes as we had no part in the management, costs, or revenue from this property.    Any suggestions on how to manage this unusual situation are appreciated.   Thanks.