According to IRS Publication 523 at this link, you need to report the gain if any of the following is true.
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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 don’t qualify to exclude all of the gain.
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You received a Form 1099-S. If so, you must report the sale even if you have no taxable gain to report.
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You wish to report your gain as a 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 main home within the next 2 years and are likely to receive a larger gain from the sale of that property. If you choose to report, rather than exclude, your taxable gain, you can undo that choice by filing an amended return within 3 years of the due date of your return for the year of the sale, excluding extensions.
If none of the three bullets above is true, you don’t need to report your home sale on your tax return.
Also, consider these things:
- The gain is the difference between your proceeds and what you have "invested" in the house. What you have invested is known as "cost basis" and that may be more or less than your mortgage balance.
- If you used your home for business or rental, the depreciation you took on the home is deducted from your "cost basis" when you calculate the gain. And, the portion of the gain equal to that depreciation is taxed as ordinary income in the year you sell. There are worksheets in Publication 523 if you need to calculate this.
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