Is the profit from an assignment sale before closing treated differently under the residential flipping rule?

No - profit from assigning a purchase agreement before closing is generally caught by the same residential flipping rule framework as a completed property sale, rather than being treated more favourably just because the building hasn't closed or been built yet. The rule specifically extends to assignment sales, including presale assignments of new construction, so a quick profit from assigning your rights to buy a home to someone else within a short period is analyzed the same way a fast completed sale would be.

This means the profit can be deemed fully taxable business income under the rule, with the principal residence exemption unavailable, based essentially on how quickly the assignment happened relative to when you entered into the original purchase agreement. Some assignors assume that because they never actually took possession of a finished property, the flipping rule shouldn't reach the transaction at all, but the rule was specifically designed to capture this kind of short-term profit-taking on presale contracts, not just completed sales. The same recognized life-event exceptions that can take a regular sale outside the rule can also apply to an assignment sale where genuinely applicable.