I think you may have a choice. You can treat it as along term gain because the new house is an "improvement" to an existing long term asset (the property). But, since you're treating it as a single asset, you have to also recapture the depreciation taken on the old house (since it was also an improvement to the single asset).
The 2nd choice is to treat it as 3 assets; the old house, the land and the new house. The new house being sold for a short term gain. The land sold for long term gain and the old house disposed of for 0 gain or loss (and no depreciation recapture).
But, that's an opinion. I have no expertise on the subject. As others have suggested, you may need an expert.
