@John LasherI don't know your exact situation. 

Especially now, I am seeing a lot of people who bought during or right after the COVID pandemic and are in situations where they simply cannot sell their homes for any profit (many of them bought as new construction).

In short its complicated:) each situation is different

That means having procedure and protocol for every situation--or at least, every common situation. 

How do you get paid, Is this an under the table kind of situation or is it something to add as part of your business cash flow.

They are really the only ones that can give you an accurate answer to your specific situation.

I’m weighing two options for our housing situation and would greatly appreciate your advice, given the complexities involved.1.Renovate and Buy Another Property•Invest to renovate our current home adding a bedroom to the house given our family outgrew the house.

I've started asking questions for clarity with scenario/situation posts like this.

Is it situation based?

>>For purposes of taxes, consult with a CPA to confirm this would work for your situation, but you could have the LLC be treated as a "disregarded entity" and thus, even if you and your wife are members, any profits/losses would "disregard" the LLC and go directly on your personal returns.