tax consequences for selling with owner financing

[Mark Murphy]

Let's say I am looking at owner financing the sale of a property.

Lets assume I bought the property for $100k with 20% down, and 5 yrs later sell for $200k, and owner finance 5yr balloon with 20% down @ 6%  and 30 yr amortization.   

The purchaser is looking at 160k loan.  Monthly payments will be $959, initially with $800 in interest and the remaining in principal.

My questions are

1) How is the 20% down taxed - is that taxed at profit and applied at capital gains rate ?

2) How are the repayments taxed. (interest vrs principle ?) What is the impact of the remaining loan on that income (completely offset, or offset only the interest portion ?)

3) After 5 years how is the payout taxed. I would assume capital gains on the remainder of the gain after removing the principle repayments ?

I expect this is a very complicated question with many factors such as depreciation and capital improvements involved. However, I am looking for as simple as possible high level understanding of the tax consequences excluding all the aux factor in order to make a real life decision.

Thanks !