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I think basically you would purchase the house from the business, but this could raise a few eyebrows with the IRS.
You would need to be transparent and not buy or "keep" the house if it resulted in any deferment of tax.
You would either need to pay a fair market value to the company to generate taxable income, or not pull any "pay" yourself when building the home.
If the business pays you (depending on the business type) , then you keep the house, the business might not recognize the profit it deserves.
Your basis would be questionable as well. As long as you only pay "everyone else" your basis would not include your own revenue.
If you live in the home at least two years and sell, any increase of value might be excluded from capital gains.
I don't see anything illegal about it if you treat the expenses the same as if you were an individual paying to have your house built.
Material and outside labor would be personal expenses. If paid from the business funds, there would need to be a clear log kept.
I don't think you could allocate business expenses, such as a license fee, to the cost of building the personal residence, on the other hand, if you don't intend to ever build a house for profit, those costs would not be business expenses either.
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