Say I Sell my investment property house for 500k and bought it for
250k. Leaving me 250k profit.
So far so good.
I'd be taxed on 50% of that correct: 250/2 = 125k taxed. and 125k
No. 50% of your profit counts as taxable income. 50% of it is tax free. So $125K of the profit is taxable, but that doesn't mean you pay $125K tax.
So you add $125K to the amount of income you have. (This is kinda done for you as you fill in the tax form)
So you have a taxable income of whatever you earned elsewhere + $125K from the house sale. You pay tax on that at whatever the appropriate rate is - it varies according to whatever else you earned.
If that rate is 33% then you will have paid 33% * $125K = $41.25K.
(The calculation can be more complicated because of marginal tax rates)
But the key point is you pay tax on 50% of the profit: you don't pay 50% of the profit in tax.
You might look at this simple guide to capital gains.
Payments on loans you took out for purposes of investing (including mortgages on investment properties) are tax deductible. You reduce your income by the amount of interest you paid on the loan. But at this point a tax advisor would be really helpful, and almost certainly find you more in savings than they would cost.