I am considering taking time off from work in order to build a new home in which we would live. It would be my full time job for which no income stream would be generated and would be self financed. Even though I would be working, I would not be getting paid. Even though I would be creating value, no cash would be coming to me as income, resulting in no taxes owed, as I understand the tax codes.
QUESTION: If we lived in the house for more than two years, which I understand is the limit necessary to avoid paying capital gains taxes, and then sell the house, on which there is no lien as it was self financed, would there be any way to be imposed a fiscal liability of any kind?
I am asking this because, were I to have a conventional job but hire contractors to build my house, I would be paying income tax on my salary, which may be refunded at the end of the year as a result of home building expenditures. But nonetheless, my labor and the labor of the contractors would be taxed. However, if I were to work exclusively on my own project, which generates no immediate income but was monetized at the end via sale nonetheless (taking advantage of the law that waives tax liability after a certain time of occupancy), it turns out that in the end I could be making money as a result of work performed that is not being taxed, which some may see as a tax loophole.