Congrats on the moves.
In order to qualify for the home sale exemption, you would need to have lived in that home 2 of the last 5 years. There are some special circumstances that may get you around that. Assuming you fail to meet any of these special circumstances, then yes, you would owe capital gains tax on the sale.
Even if you don't meet all of the requirements (2 out of 5 being one), there are special rules that may allow you to claim either the full exclusion or a partial exclusion:
- If you acquire ownership of a home as part of a divorce settlement, you can count the time the place was owned by your former spouse as time you owned the home for purposes of passing the two-out-of-five-years test.
- To meet the use requirement, you are allowed to count short temporary absences as time lived in the home, even if you rented the home to others during these absences.
- If you or your spouse is granted use of a home as part of a divorce or separation agreement, the spouse who doesn't live in the home can still count the days of use that the other spouse lives in that home. This can come into play if one spouse moves out of the house, but continues to own part or all of it until it is sold.
If either spouse dies and the surviving spouse has not remarried prior to the date the home is sold, the surviving spouse can count the period the deceased spouse owned and used the property toward the ownership-and-use test.
Here's a great TurboTax article that discusses some of the finer points.
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