how many month we have to live in 15 years old house i can save capital gain that is my principal residence

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I would be very grateful if someone helped clear this up for me — when exactly does the holding period begin to qualify for long term capital gains treatment on a real estate investment home? a friend of mine asked his tax preparer this question and the answer was "the holding period begins on the day i first list the house for sale." i bought a vacant lot in spring 2010 and completed my first spec home in october 2011. the house was listed for sale in july 2011 before it was completed. according to the definition above i only recently dodged a bullet. i was $1,000 away from meeting a buyer's offer. if the sale had went through i would have had to pay nearly 30% of my profit in taxes to the federal government, not to mention what the state would try to take from me. i want to avoid the blood sucking thieves of the federal government as much as possible. am i correct in assuming then that i cannot close on the house until july 2012 if i want to qualify for the long term capital gains tax rate of 15%? and if this is true, none of it makes any sense to me. to qualify for this rate i have to wait until the house has been listed for sale for an entire year and not sell it until 365 days are up? what is the point of putting it on the market and then rejecting offers in the meantime until the year is up? this just seems like another case of the federal government making it as difficult as they can for investors to eke out a living without having to pay them most of your income. also if your answer is that i will be subject to both income tax and self employment tax because it is considered "inventory" because i'm running a business, i would respond that i will not tell the irs my intentions, i would merely tell them that i was planning to move into the house but i had to sell it because of my financial situation. in truth i probably won't even build a second one if such a large part of my income is stolen from taxes. besides how would they even know that i intended to start a business but decided against it? i will move into the house if i have to, even if i won't qualify for a full or partial exclusion of taxes on the sale of a primary home. ps i'm tired of asking this question and getting flamed. i just hope t get an honest answer from someone who read the post and understands the question. how can they verify my intentions? for all they would know i am selling my primary home if i choose not to ever build another house. how can they verify my intentions? for all they would know i am selling my primary home if i choose not to ever build another house. how can they verify my intentions? for all they would know i am selling my primary home if i choose not to ever build another house.

"How can they VERIFY my intentions? For all they would know I am selling my primary home if I choose not to ever build another house." - B/c putting a house you are building up for sale just a few months after you bought the lot and 3 months before you even finish construction obviously shows you never intended to live there. Stop working off the assumption every one else is stupid.