The rule on postponing taxable gain was eliminated at least 20 years ago, possibly 1997.
The current rule is that you are allowed to exclude up to $250,000 of the gain from the sale of your primary residence, or up to $500,000 if you are married filing jointly, as long as you lived in the home for at least two of the past five years, and owned it for at least two years. Any gain over those limits is taxable long-term capital gains.
If the sale of your home in 2020 resulted in a taxable capital gain, you report it in 2020. It is completely separate from whatever you do with the proceeds.
If you have postponed gain from a previous home that was rolled into your current home that you bought before 1997, that Hass to get taken into account when reporting the sale of your most recent home. You must reduce the purchase price of your home by the amount of any postponed gain, before you calculate whether or not your taxable gain is more than the exclusion limit.
