Donna Bordeaux advises campground owners to sell soon if they're planning to within five years, before capital gains taxes could rise from 15% to 39.6% under proposed changes. She explains how sales are split between assets and goodwill, and offers help documenting sales to maximize value.
January 25, 2021.
15%.
Up to 39.6%.
If you're a campground owner and you're thinking of selling your campground within the next five years, you may want to consider looking sooner than later. You'll want to make sure that you're prepared well for that sale by having all of your documentation in order to but there's a key tax strategy that may prompt you to sell sooner than later under our new presidential administration. Biden has said that he would like to remove the capital gains tax. That capital gains tax provides a large break in the tax rate to most campground owners who are selling. Capital gains applies on the difference in the selling price after we subtract out the fair market value of the assets that are sold. The sale of the assets are taxed at ordinary income rates, while the goodwill is sold based on capital gains rates as an investment. Currently, capital gains rates are a maximum of 15% for individuals. If this tax break were removed, it would be taxed as ordinary income, which under Biden's plan would be up to 39.6% and possibly more, just depending on some other taxes that may accumulate. On top of that, that difference between 39.6 and 15% or whatever your rate personally might be could be a fairly significant number. When we talk about the selling price and what you're able to negotiate, buyers understand this too, so they want to take advantage of this and get you to sell while you can still get the capital gains right. So if you have questions or you're considering selling your campground, I'd be happy to talk with you. There's a lot of planning that goes into selling for the maximum value possible, and I'd love to help you achieve that goal. I'm Donna Bordeaux with campgroundaccounting.com Sam.
