Seller financing/capital gains question

[Spencer Mills]

Hello! 

 I'm looking at purchasing a $1.2m property. This property is 8.9 acres, has 2 warehouses and a fairly large paved parking lot. 

I plan to use 1 of the warehouses for my automotive business. 

I don't have enough for a traditional down payment. However, the owner is open to creative financing options, expressing that he'd like to avoid as much capital gains tax as possible. His first financing offer was $200k down, 20 year term, 7.9% with a 10 year pre-payment penalty (unsure of penalty specifics yet) . I don't have the $200k though. 

We have a fantastic relationship with the local bank. Several million loaned to us over the last 20+ years for other businesses. My proposal to them might look like this: $800k bank mortgage, 25 year term, 5.5% - $400k seller financed, 20 year term, 7.9%.

The interesting part of this deal is that a large company just signed a lease with the owner to rent 1 warehouse and a large portion of the parking lot for $7500/month, 2 year term laid in full up front. There is also another small conakny renting a portion of warehouse 2 for $2500/month, and just signed a 1 year lease. 

If the bank doesn't immediately reject this offer, what does the capital gains hit look like for the seller? I'm 95% sure he inherited the property many years ago. 

Are there any other scenarios that I might be able to aquire this property with little money down? Thanks!