Again, where was she living while the work was done?  

An IRS audit is unlikely unless she has a vengeful ex. But the first question asked would be, when was this discovered?  She says, not until she moved in.  But is there evidence that it was a known fixer-upper and she saw that it could be sold at a profit once the work was done.  Of course, she could be an influencer with videos on "how I made money buying a house with asbestos that I didn't even know about."