I sold a home after living in it 20 months. My wife and I have a combined income of 72,000. Do I have to pay capital gains? Is there an exclusion for income?
At first glance, it looks like you will have to include the gain in your income. The IRS lets you exclude up to $250,000 of gain on the sale of your main home ($500,000 if filing jointly) if you meet certain requirements. Since you didn't live in the home for the requisite 24 months, you won't qualify for the exclusion. However, you may qualify for a reduced exclusion in special circumstances. TurboTax will use the information you provide during the "sale of home" interview to see if an exclusion applies to your situation.
For details about excluding gain on the sale of your home, please see Tax Aspects of Home Ownership: Selling a Home.