Seller Financing Tax Question

[Anthony Rega]

If a seller, who files taxes as "married filing jointly" and has owned their primary residence for over 2 years without any outstanding mortgage, wishes to sell their property for $750,000 and agrees to finance a second mortgage of $250,000 for the buyer, would they be required to pay tax on the entire $250,000 in that year? Or would they only need to pay tax on the amount they actually receive from the buyer's mortgage payments that year?

If I'm not mistaken, the Section 121 exclusion allows for a tax-free gain of up to $500,000 on the sale of a primary residence.

If a seller who is married filing jointly that is selling there primary residence own over 2 years own property free and clear and wants to sell the property for 750,000 and agrees to hold a 2nd mortgage for 250k would they need to pay tax on the 250k that year?  Or only the amount they received from new buyers mortgage payment.   

Section 121 exclusion allows up to 500k tax free on primary resident sale if Im not mistaken.