Like aircraft checklists and vehicle operators manuals (the -10s), one can benefit from extensive research, trial and error, and deliberate improvement principles gained by the many that have gone the path before. 

You don't have a great case for a tax appeal here because it looks like it was upped based on the renovation and improvements done prior to you buying it.

What is your skillset or time availability, what is your network currently like and do you need to improve that?

You would have to improve the property (dramatically) at great expense to actual meet that definition and use it as a townhomes.

@Jaycee Greene I met with the credit union and waiting on an appraisal but pretty certain I'll access to around $80K @ 8%.

If not, selling the house to an investor could be quicker to access some cash. 

For subdivisions, a civil engineer can help create plats and an improvement plan showing how utilities will be implemented.

Alternatively, consider a cash-out refinance to access equity without triggering capital gains or explore a 1031 exchange to defer taxes by purchasing another investment property.This post does not create a CPA-Client relationship.

🌞6️⃣ Rental Income Deductions: Earn income & deduct related expenses.7️⃣ Home Equity Loan Interest: Deduct interest if used to improve your home.8️⃣ Military Moving Expenses: Active-duty?

Access to financing, such as 90% of the purchase price, can significantly lower the entry barrier, but success still depends on having a well-thought-out plan for managing renovation costs, timelines, and potential risks to ensure a profitable outcome.