Partial Seller Finance Tax Implications

[Lukas Loveland]

I've got a seller that is willing to finance about half of the down payment for a property that i'd like to purchase by holding some of the equity back in the sale of the property. I wasn't certain on the tax implications of this so i figured i would ask the community.  

For discussion purposes we'll use my purchase price at $200k, Adjusted book value of $100k, and current owners original purchase price of $200k.

From what i've read, the seller holding back $20k of the equity in the property in the sale so that they can finance a portion of my down payment would not effect depreciation recapture, (25% of 100k) and that portion would also not qualify for the installment sale provision (allowing the recapture to be spread over the length of the loan).  It just means that the seller would pay tax on the interest income of this loan and just have the benefit of making a little money on it by lending it to me.  Is this correct?

TIA!