Stuck with city permit

[Sam Issa]

Looking for advice. Last year, I bought a 3/2 SFR in Tampa, FL to fix and flip from a wholesaler. The house was in mid-rehab and was red-taped by the city for work without a permit. I checked with the city and they said you'd have to bring it up to code and pass the inspection of electrical, plumbing and framing. We were also requested to do blueprints of the whole house. Had a lot of back and forth due to FEMA regulations and that we're not supposed to "overdo it" beyond 50% of the assessed value, otherwise, we need to demo it.

We hired a private appraiser to increase the value of the property, and we sort of got away with it. We passed plumbing and electrical, only to be told when doing the framing inspection that the house is a 2/1, and that the additional bedroom and bathroom were not permitted and are not up to code! Solution? Demo it, or remove the addition!

I'm stuck and not sure what to do! If I remove the addition, it'll bring the ARV down big time. I'm already $185K deep and would appreciate any advice.

TIA