Does the flipping rule apply to presale assignment sales of new construction homes?

Yes. The flipping rule extends to profits from assigning a purchase agreement for a home - an assignment sale - including presale assignments of new construction properties, even before the building itself is complete. If you assign your rights under a new-construction purchase agreement to another buyer for a profit within a short period after entering into it, that profit can be caught by the flipping rule the same way a completed property sale would be.

This surprises a lot of presale buyers, who sometimes assume the rule only applies once you actually own a finished, closed property, since an assignment happens before you ever take title to a physical home. But the rule is specifically designed to reach this kind of transaction too, so a quick assignment profit on a presale contract can end up treated as fully taxable business income, with no access to the principal residence exemption, just like a short-held completed sale would be. If one of the recognized life-event exceptions genuinely applies to your situation, it can take the assignment sale outside the rule the same way it would for a regular property sale, but absent that, a fast presale flip carries real exposure under this rule.