Owner Financing Primary Residence

[Charles Kannon]

I lived in my home in South Carolina as my principal residence for all of the last 10 yrs, moved, then sold with owner-financing. 3.5 yrs later after sale, the buyer re-sells the home and sends me full loan payoff. Would I pay capital gains on it since I now haven't lived in home for 2 of last 5 years? (I've not done another capital gains exclusion ever.)

Or would the sale be considered to have already happened 3.5 years ago, the owner-financing be considered a loan, and only the interest on the loaned-out money be taxable?

Thank you so much!! Charles