Did you call up the IRS yet and get some advice? Whatever you paid for the place it was market value. A property is only worth what can be gotten for it. Again, your whole scheme is fraught with tax liabilities. Among them is your liability to pay taxes on the value of the handyman's free rent. Another one is the gift tax and penalty on the money you will eventually transfter to him if you make a profit. Then there is the taxes you owe on the value of the renovations done at cost. The free labor is a gift to you and a tax liability. The whole thing is a mess.