What are the tax implications for the seller in an owner-financed deal? 

Surprisingly enough because of low taxes and interest rates the numbers in certain ways seem to work out. 

(please correct me if I'm wrong) Will any money owed on the house follow the buyer who bought it at the auction?

You want to compare what’s still owed on the system (I wouldn’t buy anything without a stated buyout price every year) vs what a new system would cost you, especially after the 30% rebate.

but it sounds like you know a lot of what you DON'T want; what you do want is the opposite. if you're going to do your next project alone, it sounds like you want a LTR nearby that's relatively turnkey without any problem-tenants. you can do a 'lazy 1031' where you just sell traditionally & in the same calendar year buy the new property, while working with your cpa to figure out how to offset the tax bill. you could alternatively partner with an active investor on your next deal; that way you could invest in what could be a higher cashflow market compared to where you live, and not have to invest much time (since it sounds like you guys don't have as much time to spend on this now). 

Something like "unfortunately at this time I do need to raise rent due to increased property taxes, insurance costs, etc.

I did title search, and indeed something came up.The Bidding statement from the committee lawyer that will be running the auction says according to Tax Collector there is $2100 recent property tax owed. 

Does this raise taxes?

Noticed it was abandoned, researched courthouse records, determined it was adjudicated to the Parish for non-payment of taxes, submitted purchase request to the Police Jury for amount of back taxes, made required notifications by mail and newspaper, waiting mandatory days for owner to redeem, and when redemption period expired, closing occurred at Police Jury Office.

You have to just go with what they give you. they charged me right away the $97 (plus tax) then I was like umm wtf?