Can Seller Financing Reduce Capital Gains?

[Hans Thurau]

I have a beach duplex in Southern California valued at around $1.8M; I originally purchased it for $350K. If I do a standard sale, my long term capital gain minus my $250K primary residence exemption will be high considering my gains are over $1M. One strategy I considered is to offer seller financing (me being the seller). I do not have experience with seller financed transactions... would the down payment be subject to capital gains tax (and/or the monthly payments)? Additionally, are the monthly payments I receive taxed at the same "capital gains rate" considering there would be interest on top of principle included in these payments? Any advice is greatly appreciated.