I took the total expenses you mentioned and subtracted out the capex, vacancy, management and insurance)CAPEX: $280 (10%)Repairs(toilets, sinks, floors, appliances, electrical, etc..): $280 (10%)Vacancy: $280 (10%)Management: $168 (6%)Insurance: $100 (to be honest, this seems really low also, but I again assume you have already priced this out. 

If you want to use a cost appraisal, you must then subtract various depreciation factors to arrive at one component of a FMV appraisal.

I typically subtract 3%, of the ARV.Realtor Fees: What is the commission you are willing to pay your listing agent (unless you are the listing agent) and the buyer's agent.

I tend to be very cautious with my analysis of properties by taking 26% off the top to cover repairs, vacancy, CE, and management so cash flow for me comes into play after taking away 26% and then subtracting the monthly mortgage payment.

Can be fixed through creative dampering, adding or subtracting vents, adding or subtracting intakes, in-line fans in worst case scenario.4.

This gives your effective gross revenue.Next are all your operating expenses (utilities, taxes, garbage, snow removal, maintenance allowance (10%), management allowance (this pays you: 7 - 10%), etc.)A little subtraction and we have the Net Operating Income.Now you have debt service {mortgage(s)} your capital expenditure reserve (8 -10% of effective gross revenue) and {income} taxes which must come from your NOI.Whatever is left goes into the kid's education funds ;-)[Note:  I missed the been a 7-yr {live-in} landlord before I typed the above ... most of it you undoubtedly have mastered.  

Would you simply subtract the tax delinquent amount from the purchase price, or would you build in more of a "buffer zone" to account for other expenses and/or tax increases in the coming years?

The depreciation is subtracted from your basis. 

They look up the sale price of the home you bought on Zillow and subtract that from their offer and assume you are making a killing.

If you have a 3 bedroom house with an unfinished basement and yours is The same but on a crawl I subtract 10K. 2 bath verse I bath subtract 5000.