Owned the house for a year and two months, and lived in it that whole time, so I don't pass the two-out-of-five-years tests. Could a reduced exclusion is available if I sell my house before passing those tests because of a change of employment location? It's the same job that I am allowed to work from anywhere, and I want to move to another state. Does this qualify as a change in my employment? What about the timing of the job and the sale? Do I have to move to my new job site first, then sell? Or can I sell first, and is there some kind of a grace period where I can wrap up the sale, then move to the new job?
You only qualify for a pro-rated exclusion of your gain in your case, if the move was a requirement of employment or continued employment. If you moved just because you wanted to work that same job elsewhere, then that's not a condition of employment or continued employment unless not moving would have caused you to lose that job.
Understand how it's prorated too. As you know, up to $250K is exempt if filing single. If you qualify for a partial exclusion and lets say you lived in it for 20 months, then your exclusion will be 20/24 of your gain, and not 20/24 of your maximum allowed exclusion.