I recently bought a new iMac as well as a wireless time capsule and have it connected how can I use this external drive as the location to store all my files for iTunes, or is this even possible?

New iMac user here, I recently bought a new iMac and Time capsule and have the whole network up and running now. I have connected another external HD to the time capsule as well and have a total of 3 TB of storage connected wireless to my new iMac. My question is can I use this location as the default location for iTunes?  I doubt I am gonna run out of room considering the iMac has 1 TB of storage already, but I'd prefer to keep my movies and music off the Mac to keep it running smoothly. If this is possibly, I'd like to do this with iPhoto as well. 

I would advise against placing your iTunes library on a Time Capsule.
The Time Capsule is designed as a backup device and not for wireless streaming of video.
Before you do anything more, can I suggest you put into place a reliable, redundant backup strategy.
Unless you are prepared to risk loss of your iTunes library due to a hard drive failure, I would not put iTunes on the Time Capsule.
Leave your iTunes library on your iMac until such time as your internal drive is full. Backup to Time Capsule using Time Machine and create a clone of your internal iMac HD to your external drive.
That's my 2 cents worth. Others may have a different opinion.

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