Does this enable us not to pay capital gains tax?

It will be easier, but you will pay 2x-4x more than you would if you were local and on-site watching.What's your plan for watching the rehab? 

You could always pay off the line of credit without any pre-payment penalties. 

The lender explained that the standard carve-outs include committing criminal activities on the property, failing to pay property tax and failing to purchase insurance for the property.

This means I would take over the loan and pay 2k/month on top of needing to come up with 280k.

King if your goal is only to pay the bills. 

Don't get me wrong, there are some great VAs out there, but you have to find them, train them, monitor them and pay them well for them to produce anything above mediocre results. 

They will supposedly first pay you back your initial earnest money with interest within four weeks of signing their NEW RELEASE AGREEMENTS as a show of good faith if you get in touch with their attorney (send me a private message so I can send you instructions to get in contact with their attorney), and then the remaining outstanding deposit with interest within two months after that.

Also  beware that  paying a large loan fee  may affect the lenders  ability to do the loan.

I am not familiar with who you are working with but always recommend vetting any company deeply before signing and paying -- those companies tend to have a lot of overhead they need to pay - out of your bottom line.