Does the 70k gift of equity we included on the sale of a home to my daughter and her spouse that were renting the home from us count towards capital gains tax

You'll need to explain more about the transaction.  When you were renting the house, did you report the income and claim depreciation?  (To them or to other tenants before?)  What price did you sell the house for?  (Regardless of the loan amount.)

In general, capital gains is the selling price minus the adjusted cost basis.  In the case where they partially bought the house and partially received a gift of equity from you, their cost basis becomes more complicated, especially if your cost basis had been reduced by depreciation that you claimed or could have claimed?

Third, your daughter and their spouse owned the home and lived in it for at least 2 years before the selling date, they can exclude up to $500,000 of capital gains from taxation.  It sounds like the selling price was probably less than $500,000, so even if we ignored the capital gains calculation and assumed a zero basis, the gain would be less than the exclusion and would not be taxable.

However, if you claimed depreciation on the home, and then gave the home to them (or partly gave the home to them), they may owe depreciation recapture on part of the gain, even though most of their capital gains would be covered by the exclusion.  We need to know more of the details.