If I build a new house on a property, will that qualify for the capital gains exclusion on a sale of primary residence?
For example, let's say I buy either an empty piece of land or one with a house and I demolish the house and it costs me $300,000. I then live in a trailer on the property and list the property as my primary residence. I build a new house and it costs me $250,000 in expenses to build the house and it takes a year to build the house. I then live in the house for a year, until I have lived on the property for a total of 2 years. I then sell the house for $700,000 and claim $250,000 in capital improvement expenses. Can I then exclude the remaining $150,000 gain under the primary residence exclusion?