You can look up sections 7872, 1274 and 483 of the Internal Revenue Code.

@Rachel Gill We have a thing for older properties as well ... which is a good thing as our area is filled with Queen Anne, Second Empire, Victorian, Georgian, & Edwardian era buildings.It is possible to renovate these old buildings, making them moderately energy efficient (as good as a modern minimum code built home) and still maintain some of the period decor.  

Be aware that there are other California code regulations that also must be followed.Most states would consider the sale of fractionalized interests a securities offering, not have a specific procedure for it other than the general securities offering procedures. 34 states have adopted exemptions for private placements similar to the SEC general exemption for private placements.

You would need to install road and utilities, but we'll cover that later.But, send the R2 zoning text (the language of their zoning code) and we can help you determine from there.Thanks.~ Scott

Don’t alter your minimum requirements to fit a potential tenant.  

Then, after all inspections are passed, close it back up and finish it off.Also, you might ask the building official if you can submit a professional engineer's letter that says he saw the construction, and that it was all done according to the applicable codes. 

There is no required holding period in the code, regulations or rulings other than you be able to demonstrate that you did in fact have the intent to hold for rental, investment or business use. 

We have the luxury of our own crews and subs which we use for our custom home builds and intimately know the code officers and zoning issues.  

That said, by adding the basement as living space to the first floor unit, you are not asking for a change in legal use, but you are (officially) altering the building in ways that will affect it's potential occupancy (and you will need a Certificate of Occupancy from the city before you can move in, rent, etc).

Just make sure to comply with the building code in your jurisdiction.