Deductions & credits

No, you are not required to report the sale of your primary residence if you qualify and the gain is under the limit:

You can exclude up to $250,000 of gain if filing single, or $500,000 if you are Married Filing Jointly (MFJ) if:

• You owned the home;
• It was your main home for two years or more of the five year period ending on the sale date; and
• You did not exclude gain from the sale of another home during the two year period ending on the sale date.

To avoid upgrading, answer the question "no."

Also note:

In general, the sale of your main home is not taxable, but you may be required to report this transaction on your tax return for the year of the sale, whether you sell at a gain, or a loss (see below).

See: IRS Pub 523 Reporting Your Home Sale

"You need to report the gain if ANY of the following is true.

• You have taxable gain on your home sale (or on the residential portion of your property if you made separate calculations for home and business) and do not qualify to exclude.
• You received Form 1099-S. If so, you must report the sale even if you have no taxable gain to report.
• You wish to report your gain as taxable gain even though some or all of it is eligible for exclusion. You may wish to do this if, for example, you plan to sell another property that qualifies as a home within the next two years, and that property is likely to have a larger gain. If you choose to report, rather than exclude, your taxable gain, you can go back later and undo that choice by filing an amended return, but only within 3 calendar years after the year of sale.

If NONE of the three bullets above is true, you do not need to report your home sale on your tax return.