Basement bedroom or attic bedroom

[Eric Salgado]

I bought a 2 bed 1 bath out of state (Kentucky) the property has a basement area and attic. Both are not to code so they are not counted as liveable space as well as not counted as a bedroom. My question is do I add ceiling height to the attic by making it a dormer which would count as liveable space or add egress windows to basement to make that liveable space. Both would put me significantly over budget especially the attic height raising. Does anyone have experience with this and a recommendation on which one is better for a value add as well as getting section 8 to count as a bedroom.