Help with Structuring Deal

[Brian Campbell]

I met with a seller today and I think we're close to making a deal. He owns the property free and clear and wants to avoid paying a lot of capital gains tax. We verbally agreed on 40K--I believe he bought the property for around 16K. I suggested he consider carrying a second mortgage. For example, I buy the house for 25K and he carries a 15K loan where I would pay him small monthly payments for several years @ 6% interest with a balloon payment at some point.

Does this makes sense? I'm not sure if this would cause him to not have to pay capital gains tax on the note he carries, at least until I pay him off. Would appreciate some help structuring this deal. Thanks!