I sold a property last year that I originally lived in and then rented out. It sold for a net gain (due to previous depreciation--that really turned into unallowed loss).
I qualify for the special exclusion (lived in 2 of 5 years) so I don't need to pay tax on the net gain.
In publication 523, in one section it says I don't have to report the gain. In another section, it states that I still need to report the net gain if I received a 1099-S for the transaction (which I did)...even if I have no taxable gain.
Do I need to report it? If so, do I use 8949 or 4797? On both of those forms there's not really any place to state that I qualify for the special exclusion...so where would I put that? Thanks for any help.