Or do I have literally NO tax obligation from the sale?

It's no guarantee but it's a good place to start.

I recently bought a flip house and upon starting on the house I was shocked when we had no water.The neighbor of the property was sharing his well with the house, he and the deceased owner had a verbal agreement, nothing was filed. 

In my condos, I hold: they are pretty new, with healhy equity already, and solid, with no Special Assessment at the horizon.

Is this consistent with what I should expect to pay for the returns I had performed?

If the renovation cost makes the total purchase creep up very close to the new build, I think it's a no brainer. 

There is no telling what repairs or unexpected expenses will come up.

Be very very careful with a guy like this....But to answer your question - No you cannot dodge the reporting of a large sum of money to a Contractor.

We said no because it seemed like it was going create a big headache for us and we have a 60 days to occupy.

Virtually every economist states rent control is bad for the community, but we have politicians with no understanding of economics making these type of decisions.