Q. My questions is, will I have to pay taxes, capital gains or other, on the $35000 even thought we sold it for less than the value?
A. No. You don't have a capital gain, you have a capital loss ($35,000 sale price minus $61,700 cost basis equals a $26,700 capital loss). As others have said, a loss on the sale of personal use property is not reportable or deductible.
The $35,000 proceeds is not "income". Only the gain (profit) on the sale, if any, is reportable income.
