Here's a bit more in detail about how rates are calculated for DSCR loans:1.

If not, what are property tax sales? 

It would/could be only 15% capital gains tax and yes you could/would deduct all selling costs including commissions and transfer taxes.

If the permanent financing will allow you to recover most of your initial investment and the fair market rent covers the principal, interest taxes, and insurance with cash left over, you have a BRRRR.

As far as your next property, if you are already considering moving you will get better loan options + interest rates if you decide to live in the next property and rent out your current house. 

You and your legal, tax and financial advisors should review this transaction in greater detail, especially the PLRs, to ensure you understand the significant risks involved and are structuring the transaction as close as possible to the PLRs to mitigate some of the risks.

Property taxes are 2% instead of 1% for landlords as a general rule (some districts may  be slightly higher). 

Here's a bit more in detail about how rates are calculated for DSCR loans:1.

2. don't use an appreciation rate.

The only other option that comes to mind is to make the improvements and try to achieve favorable rental rates to push the story that 2 BR homes rent for a premium because its unique.