Selling and building in Boise Idaho

[Greg Betts]

Hello BP, looking for some advice.

I bought the 3bd/2ba house as a primary residence for my family in 2012. Last year 2020 we purchased another SFH and converted the 2012 home to a rental. After a year of renting to a great tenant, great cash flow, we are going to sell the property and build a duplex with the profits.

My questions...
Do I pay capital gains tax or am I exempt?
Do I pay income tax on the profit we make?
If yes, how would you organize the sale and development of a new property and give up losing money to taxes?

Thanks,