Yes, you will have to pay capital gains if you sell if after only living in it for 18 months but what you are envisioning is not correct. When you sell your house, the gain will be based on Sales proceeds less expenses of sale (commissions, etc.), less cost of the residence (original cost plus improvements since purchase).
The example would be similar to this, please remember dates and amounts are for example purposes only:
Purchase Date - July 1, 2020
Sale Date - December 31, 2022
Length of ownership 18 months. Not qualifying for exclusion but qualifying for long-term capital gain treatment
Purchase Price - $100,000
Closing costs at purchase (not including pro-rata real estate taxes) $5,000
Improvements made $20,000
Total Cost Basis $125,000
Sales Price - $150,000
Less closing costs $15,000
Net Sales Proceeds - $135,000
Taxable Capital Gain - $10,000 ($135,000-$125,000)
Sale of Residence per IRS
@Lucky2142
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