<p>
The gain from the sale of your residence is considered income, however the first $500,000 ($250,000 if not married) is not taxed. See pub 523 here: [Publication</a> 523 (2011), Selling Your Home](<a href=“http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000200634]Publication”>http://www.irs.gov/publications/p523/ar02.html#en_US_2010_publink1000200634)</p>
<p>So nothing would show up from the numbers carried over from your tax return, because the profit of $50,000 isn’t taxed.</p>
<p>The kicker is line 92.i: “Other untaxed income not reported in items 92a through 92h, such as workers’ compensation, disability, etc”. </p>
<p>Would profits from a house sale fall under that? You could make a case for it, unless the FAFSA people say otherwise.</p>