The general rules are this:
- If you receive a 1099-S then you are required to report the sale *no* *matter* *what*
- If you do not receive a 1099-S and your gain on the sale qualifies to be 100% excluded from taxes, then you do not need to report it on your federal tax return. But you can if you want.
Now if at any time during your ownership of the property you claimed any type of business use such as a home office or renting it, or renting out a room, then while all of your gain may or may not be excluded from taxation, you are required to report the sale. That's because any depreciation you took on the property is recaptured and taxed. Recaptured depreciation is "NOT" included in the "2 of last 5" capital gains exclusion rules.
