He could sell tax free, you will pay regular income tax on the sales profit. 

The strategy you described makes perfect sense, especially given the relationship-driven nature of the commercial industry.I appreciate you taking the time to go into detail about why this approach works so well.

After much discussion with my regular contractor I got him to realize that if he does the project instead of subbing it out it will only cost me about $7K.

Might want to also confirm community property nature of the underlying asset.

I'd say based on the information you provided, in addition to Steve clarifying the caveat emptor nature of Colorado,  you would have zero luck in pursuing from my experience.

-Sauna-Hot Tub-Patio/courtyard (large cement tiles on crushed bluestone with lighting, natural gas line to bbq)-Secondary patio off primary suite-Losing sq feet in the primary bedroom to enlarge the bathroom-High grade cabinets-Appliances with cabinet fronts-High end appliances (Viking/Miele instead of GE Cafe)-Outdoor shower (teak box walls with a dry well beneath the footprint)-Wiring for Cat6 to every room-Wiring for surround speakers (or including the speakers that are built into the walls)-Sonos whole-home audio system-Hardwired cameras (with on-site storage) to the exterior of the house-Smart features: thermostats are a given, but how about light fixtures, switches, aromatherapy, fans ... anything else?

Scott Scheel and Ray Alcorn are also very solid - I speak at their events regularly.  

Quote from @Kaylin Gonzalez: would appreciate any information  Depends on the nature of it.

Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.

If you can benefit, then regular depreciation is a very small deduction, except for...4.