Rather than charging a fixed interest rate, I'm looking for someone willing to take 50 percent of the profit once the property is sold.As a Muslim, I adhere to principles that prohibit the use of interest.

Keep in mind that a binding arrangement may be prohibited. 

The denial was based on the following reason:"The proposed use Visitor Accommodations is prohibited in the RM-1 Zoning district per table 14-602-1".At this juncture, it seems my next step is to appeal to the Zoning Board of Adjustments.

However, i know that there are many cities within California that prohibit or heavily tax Airbnb's.

Nothing explicitly prohibits it if you start an STR and later change your plans.

The REPS-9 election prohibits grouping short-term and long-term rentals, emphasizing the need for careful strategic planning.

While your IRA owns the property - you are prohibited from personally using it ever, period!

However, the water and gas would be prohibitively expensive to split out, so I need to figure out how to handle those utilities and bill seperately.

Like others have mentioned that seems pretty cheap but if the area is good and there are no major renovations or deferred maintenance(e.g. old furnace, water heater) that would be cost prohibitive to you in the first few years of owning it, it seems it could be a good opportunity. 

First, I'd like to say that not having a w2 will not prohibit you from moving forward.