The provision in the tax law that allowed you to postpone the tax on the capital gain from the sale of a home if you bought a replacement home was eliminated in 1997. Now, every home sale is treated on an individual basis.
you will owe tax on the capital gains from the sale of this home. The general rule allows you to exclude the first $250,000 of capital gains from taxation (or $500,000 if married filing jointly) if you owned the home for at least two years and lived in it as your main home for at least two of the previous five years. If you did not live in the home at least two years, but you moved due to a job relocation so that your new job is at least 50 miles farther from your old home than your old job, you can qualify for a partial gains exclusion. In your case, since you lived in the home for about 10 months, your exclusion limit is 10/24 of the normal limits, which means you can exclude the first $104,000 of gain if you are single or head of household, or the first $208,000 of gain if you are married filing jointly. Any gain more than this will be subject to short term capital gains tax.
If you use the capital gains exclusion on the sale of this home, you will not be able to use it again for at least two years, if you buy another home and then need to sell it in less than two years.
I suspect that unless you were in a real hot real estate market, your gain will be less than the partial exclusion limit and you will not owe tax on the sale, but only you can determine this for sure. In any case, whatever tax you owe on the sale of this home will not be reduced or changed whether or not you purchase a new home.
