The previous answer is not quite correct. You can use the exclusion twice in less than two years, but the second sale must meet the special rules for unforeseen circumstances, regardless of the circumstances of the first sale. Even so, and noting that you are still missing some facts, I suspect you do not qualify to use the exclusion twice under your circumstances.
For example, suppose you sold home A in 2022 after owning it less than two years, because of a divorce, and then you sold home B in 2023 due to a different unforeseen circumstance, such as loss of a job. You can potentially qualify to use a partial exclusion in 2022 for home A and another partial exclusion in 2023 for home B.
In your case, we are still missing facts about the sale of home B. You mentioned that it was occupied from 2017 to 2020 and then sold in 2023. First, you need to clarify if you really mean 2023, because that hasn’t happened yet. Are you talking about a plan to sell a home, or did you get your dates confused?
In the case of a divorce, both ex-spouses are entitled to use their individual $250,000 exclusion even if one spouse moved out, as long as the other spouse meets the two-year and the five-year tests. If your dates are correct, you said that only one spouse lived in home B from 2017 through 2020 and the sale will occur in 2023. Depending on exactly when in 2023 the home was sold and when in 2020 the second spouse moved out, the second spouse may be allowed to use their full exclusion in which case both ex-spouses can use their full exclusion. But this does not count as an unforeseen circumstance that would allow you to use the exclusion less than two years after using the exclusion on home A. If the sale of home B qualifies you to use the exclusion under the regular rules, you can’t use any exclusion if you claimed the exclusion on home a less than two years previously. You would have to not claim the exclusion on the sale of home A in order to claim the exclusion on home B.
But you may still need to clarify for us the circumstances and the dates.
