I recently got married and we sold my wife's house, are we subject to capital gains taxes on it?

Yes, maybe. If your wife sold her house after you were married, and you file a joint return, then you are together responsible for any capital gain taxes that may be owed. However, if this was her principal residence for at least two out of the last five years, and the capital gain is less than $250K, there may in fact be no tax owed on the sale at all, even if she did not roll her profits into the purchase of another home. See: Publication 523 (2008), Selling Your Home (http://www.irs.gov/publications/p523/ar02.html#en_US_publink100027562)

Note that if your wife qualifies for the $250K exclusion and no tax is owed, you do not even have to report the sale on your tax return. It is as if it NEVER happened.