House flip scenario. Will I fall in a tax pitfall?

[David Augustyn]

I bought and rehabbed a house, planning to hold as a rental. 

I have since decided to sell. I have an option to sell on a land contract and I am trying to figure out the tax implications. 

From what I understand, I will be taxed normal income on the interest income, capital gains on the down payment and principal payments.

Question 1: Will the down payment be taxed at normal rates as it's within a year? Even if it makes up for expenses?

Question 2:  Since I will receive the balloon payment after a year, will the whole balloon be taxed at normal capital gains rates? Am I at risk for normal tax rates because of selling under a year?

I have heard the suggestion of leasing for a year before switching to seller financing, but I don't want to if I don't need to.

Thanks for any advice.