I additionally will transact on the side but that's neither her nor there.

A lot of our rehab clients set up construction management companies and run the draw deposits through their business account and then leverage the cash flow of the draws to get the additional business line of credit to use as gap money. 

It may sound trivial, but going through basic exercises and putting pen to paper can really put all sorts of things into perspective.  

I am deciding between a gut Reno/addition and a tear down to the basement.

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I would not count on the garage for any additional income.

This was a big project requiring new electrical new plumbing bathroom addition new roof Windows, everything.

My question is, are those good enough margins after you calculate additional expenses?

John,Is there an un-permitted addition that is holding the additional 300sf? 

I hate to sound mistrusting, but it is going to be difficult enough to get this situation taken care of without adding to the tax debt by owing these additional fees.