My DC are 15 and nearly 12.
We don't punish for swearing, simply because we've had discussions about appropriate language, so in general they don't.
But sometimes, between the 4 of us (DP, me and DCs) we've been having a laugh and sometimes the swearwords get included as a joke. It's always been on the understanding it's between the 4 of us, and the DCs have really good behaviour outside the house, and never used the words inside the house in a nasty way, it's always been a joke (usually the F-word, Cunt is not used and never has been).
DP and I don't swear outside the house either, it's all about being appropriate.
Although, one evening, when I was taking DD somewhere (she's 15) I got a massive 4-letter rant about people at school. She has a bit of a reputation among her friends about being neutral, "never takes sides" and is respected for it, but sometimes wants a safe place to let off steam about the stupid stuff they do and I'm it. I don't mind the swearing as it's not being aimed at me. I get the feeling that when they all move on at the end of the school year, there'll only be a couple she'll keep in touch with. I know she really appreciates that she can let her hair down so much with me, and I can often turn something into a joke which can help her gain perspective, so the swearing is incidental.