Q. Do I have to pay capital gains tax on a house sale profit (lived in for 16 months) if I take a voluntary relocation at my job (Im not being forced relocate)?
A. No.
A job relocation (voluntary or not) is an exception to the 2 year rule. You qualify for the home sale capital gains exclusion. See the other answers for details.
But, because you do not meet the 2 year rule, the maximum amount you can exclude is reduced. You may only exclude up to $166,667 (16/24 x $250,000 = $166,6670. If marred, filing jointly, 16/24 x $500,000 = $333,333.
