It has been a while since I had to warn my clients about "new" rules on converting a 1031-exchanged property to personal use.  I think there was a change in the law, a decade or so ago, but I'm not going to interrupt a weekend by looking for it.  The first thing that popped up with a Google search, and no doubt not the best source, is this:

"If you want to turn your investment property into a principal residence, you cannot immediately move into the 1031 exchange property after the closing without sustaining tax liability. To avoid paying capital gains taxes, you must retain the property as a rental unit for at least two years before you can convert it into a vacation house or primary residence."

https://www.1031crowdfunding.com/converting-1031-exchange-to-principal-residence/

So, maybe they should have filed an amended return for 2015 and turned themselves in for violation of 1031 rules.  (I write "they," because you said it's a joint return.)  Somewhere in the back of my mind I recall a five-year rule, but I would have to read Section 1031 to try to find that.  We don't believe in reading Code around here.  

So if they didn't do the right thing back then, are they home free now?  Good question.