The owner would end up getting free materials and labor for the install.

It's a slow process that takes years to materialize. 

Hey @Joy Kurutz,Given we are accountants, we cannot promote our services on BP as its against the rules.

I've heard stories of "gurus" promoting courses on how to renovate and lease homes to housing choice voucher recipients and part of their sales pitch is higher loan leverage than market signed leases.

My wife will be materially participating as the REP for this property btw.

Lots of contractors donate their unused/used materials there.

I know every subcontractor, I priced every material, I facilitate it start to finish on weekly calls.

What is required is material participation, not substantial services.

If not much time at all, then no, the rental income is not subject to KC income tax.The IRS defines active participation in an activity of 250 hours or more a year, material participation as 750 hours or more.

A lot of big promoters lie.