Does Captial Gains Tax prevent sellers from wanting to use seller financing?

[Matthew Pipkin]

Thank you to everyone who takes the time to read these posts and share their experience.

My question is what would motivate a seller to use seller financing to sell their primary residence using seller financing when it would generally forfeit their exemption from paying capital gains tax? Why especially would a seller agree to a balloon payment after just 5 years since that would give them almost no time to spread out that tax over time?

The reason I ask is that I am interested in using seller financing as a buyer to purchase property and I want to be up front with the seller about the capital gains tax they would owe, but I don't see how I could make the deal look favorable to them.