How will buying more rentals with cash out refi from existing rentals affect CG Tax?

[Jack B.]

I had a handful of properties that I cash out refinanced in 2021 to buy more properties. So I bought a few more using that cash. The properties went up in value a bit then back down due to interest rates going up. Right now if I sell them, I'd break even after transaction costs from selling. That is, the few new ones I bought in 2021 would basically give me my money back, maybe a little more, after factoring in transaction costs of selling. 

How will that affect my capital gains taxes with 1) these NEW properties I bought with the CO refinance money and 2) how will it affect the houses I pulled money out of to buy these new ones? 

[Michael Plaks]

@Jack B.

Financing does not affect capital gain taxes. Thinking about your refi fogs up the picture.

The old properties: same tax position as before refi, absolutely no change.

The new properties: your capital gain, if any, is the difference between the full sale price and the  full purchase price, regardless of financing. The number is adjusted for closing costs, and you also have to pay taxes on depreciation previously taken, aka depreciation recapture, but these factors are not affected by financing, either.