So we will not be able to apply for an STR permit even if Pt Loma is not already at the 1% quota.Our existing STRs (Mission Beach duplex) have been used as STRs since 1999 (before AirBnB or VRBO).   

You don't have to have the exemption applied to it, but a property must have it available. 

I'm working on building my credit and I would apply for FHA.

Does the 1% rule apply here or is it a different calculation?

Any liquidation event (payoff, sale at trustee sale, REO sale, or re-sale of the loan) is the "sale" that you refer to above.When this number is applied to the cost basis (the ledger of the Other Asset), we are left with the "Gain/Loss on Sale," which is an income account.

I will am currently applying myself in those categories.

Does the answer to 1 apply the same to the property tax deduction?

Remember to clearly communicate your screening criteria to prospective tenants and apply the same screening process to each applicant.  

No security deposit to refund- here in NJ the governor signed a bill allowing the tenant to request that it be applied to past due rent during Covid, which she did and we gladly accepted. 

Like @Nick C. said, no...not unless there are some indicators, like tree roots or cracked concrete....