The underwriter will require this home be superior in nature to the "exiting" home for a reason to build as a primary.

For a deal of this nature, which parties from my Work Network need to be involved?

(The time frame for this was extended due to a natural disaster extension provided by the IRS.

And in coming to this point as a natural earthy mama and many years of midwives, home births, La Leche League meetings/many years of nursing my kiddos on cue.....  

Well, when it comes to filing taxes I usually don't rely on the kindness of strangers (especially when they have no liability), but if you think getting a lot of replies (some conflicting) will help you make up your mind - Have at it.Honestly, am not trying to be a jerk (as you can see it comes naturally), but your tax guy is the best liability shield against the IRS you have. 

The window must have a net clear openable area of 5.7 square feet (5.0 square feet if ground floor), a minimum openable height of 24 inches, a minimum openable width of 20 inches, and the bottom of the opening must be within 44 inches of the floor.Size: The room must be at least 70 square feet, and no less than 7 feet in any horizontal dimension.Lighting & Ventilation: A natural light source (window) of not less than 8% of the floor area and natural ventilation (openable window/door) of at least 4% of the floor area are required.Heating: The bedroom must have heating capable of maintaining a minimum room temperature of 68°F.Smoke Detector: A smoke detector is required in each sleeping room.While a closet is expected in most bedrooms, the International Residential Code does not actually require a bedroom to have a closet.

Light color makes the rooms seem larger and natural wood looks good.It's tricky to get a really good even stain.

One hard money lender told me they don't do loans of that nature, and I am meeting with a different one tomorrow.Curious if anyone has any solutions.Thanks! 

I wonder if other mixed-use landlords have clauses in leases that address the mixed nature.

What kind of taxes he will incur depends on the nature of your "partnering."