§121(d)(8)(A)
Sales of remainder interests.
For purposes of this section—
(A) In general. At the election of the taxpayer, this section shall not fail to apply to the sale or exchange of an interest in a principal residence by reason of such interest being a remainder interest in such residence, but this section shall not apply to any other interest in such residence which is sold or exchanged separately.
Taxpayer sells their residence to an unrelated party, but retains a life estate in the property. They are able to use the Sec 121 exclusion on this sale. However, they cannot use any remaining 121 exclusion if they were to sell that life estate in the future.