Your question was cutoff in mid-sentence. Best guess -- you want to know if you can avoid paying capital gains on the sale of the house. What you do with the proceeds of the sale is irrelevant in regard to whether you owe capital gains.
What matters is whether your spouse -- and you -- meet the criteria as explained by HACKITOFF to exclude the gain. The issue of whether the money from your spouse's parents was a loan or a gift is s sticky family matter and/or a legal issue which we cannot help with here. You say you are newly married--there may be information about that "gift" you do not understand or know about. You have not mentioned whether the parents' names are on the deed or mortgage along with your spouse's name. You may need legal advice to sort it out.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
