Do my parents need to file taxes? They sold their house in 2021, but their only income is social security

If they sold their primary personal residence and they lived in and owned the home for at least two years in the five year period on the date of sale, they do not have to report the sale if their gains are less then the exclusion amounts of $250,000 if filing Single or $500,000 if filing Married Filing Jointly (and both lived in the home for two years).

If they had a gain greater then the exclusion amounts then they would have to report the sale on a tax return. Also, if they received a Form 1099-S for the sale either with a gain or a loss, the sale has to be reported.