Selling a 1031 exchanged property with increased debt

[Andrew C.]

I have never sold a property that I've previously 1031'd into. I am confused on how to think about my potential tax liability and I've had different opinions from professionals. 

The scenario is that I bought a house for $200k ($150k mortgage). I sold it for $300k. Rather than realizing the $100k gain plus any depreciation recapture, I bought a property for $500k through a 1031 exchange. It was a $350k mortgage and $150k in transferred equity. 

If I sell the house for what I bought it for net of costs, I would think that there would be $100k in gain + recapture. However, I have been told that my cost basis is $200k (ignoring recapture) and the gain would be measured by the selling price $500k. However, that increased selling price is essentially due to taking on an extra $200k in mortgage.  I have been told that's just the way it is, despite seeming unfair on its face considering the increase is due to increased debt.  Is this correct? Any insight is appreciated.