1031 Lease/option

I just purchased single family home on a 1031 exchange. I realize that if I rent it for 2 years and then move into it as a personal residence for the next 3 years, I could sell and not pay capital gains. If I do not want to move into the property, can I sell the property on a lease option and only pay capital gains on the mortgage payment received each month if I carry the paper on the mortgage. If so, would I pay on the total amt. received each month or only on the amount of the payment that is applied to the principal and not the interest? Is there another way to pull the money out of the property without paying capital gains or at least minimizing the tax? I am a novice in this area. Any help would be appreciated.

The fcat that you acquired the property via 1031 exchnage determines how you will set the basis for figuring out cap. gains and subsquent taxes.

What your are proposing to selling the property is an installment sale and thus applicable taxes rules will apply. You can not avoid paying cap. gains unless you do another 1031 or make it your principle residence.

You will porbably need a seasoned tax professional to help this scenario since you will need to correct calculate the basis using the reliquished properties purchase and sales prices couples with properly allocate what portion of each payment received will be taxed as cap gain and what portion will be taxes as interest.

Thanks for your response.