Unsecured PLOC that is cash out refinanced into conventional

[Donnie M.]

I tried searching BP and google for a direct answer but could not find an answer about unsecured lines of credit. I plan on buying on 26k property using my Private Line of Credit (PLOC) from my bank and it will appraise for 50 - 60,000 after repairs. The PLOC works exactly like a HELOC except that it is unsecured and has a higher rate.  In 6 months I will cash out refinance it into a conventional loan for exactly what I owe on my PLOC.

I do not know if this is common to do with a PLOC. I know with a mortgage or HELOC I would not have to pay capital gains tax on the refinanced amount because it is a secured loan. So my question is, will I have to pay capital gain taxes at the end of the year on the refinanced amount since the funds I bought the home with were unsecured?   Which will be about 26k.