This is not a one size fits all answer, but bad debt is non-asset based or depreciating assets - , credit cards, medical, buying dumb stuff.Good debt is debt used to make or grow your portfolio. 

AssetsAsk yourself: Do I want cash that depreciates with inflation and taxes, or do I want to build wealth?

In terms of using home equity, you would either have to take out the money using a Home Equity Line of Credit (HELOC) or you could do a cash-out refinance.

Keeping the Vancouver property could provide strong rental income, long-term appreciation, and diversification, but it also comes with tax implications, foreign ownership rules, and management challenges.

And when you do sell you would still get $250K tax free. 

You may be able to deduct mortgage interest and property taxes before the property is in service. 

My understanding is that you can sell assets and defer capital gaines taxes in an opportunity zone until the property is sold.

Home went to tax sale county kept excess proceeds.

Then what happens is the lender reports your payment history to the credit bureaus and each time hereafter if you ask for another loan and the lender pulls your credit then they are going to see your payment history and whether you made your loan payments or not which will likely influence whether or not they lend you money. 

Mostly from a home equity line of credit.