Cost basis after refinance

[Noah P Bonds]

Curious about estimating long term gains tax on a property that has been refinanced. Suppose purchase price was 100k, then five years later it was refinanced for 150k and sold shortly after that for 175k. How would the capital gains be calculated?

Are your gains taxed on the difference between sale price and the current loan amount? (175 -150 = 25k) Or are gains taxed on the difference between sale price and initial purchase price? (175-100 = 75k)

Hopefully this isn’t too simplified and thank you in advance for your replies.

[Aaron K.]

Gains have nothing to do with your loan it is just the difference in sale price, however if this was a rental and you claimed depreciation every year you have to factor in depreciation recapture at the end.