Selling Your Campground Without Giving 38% to the IRS

Good. Outdoor hospitality got institutionalized, and you built the kind of asset they're rolling up.

Here's the trap: a lump-sum cash close hands 34-40% of your proceeds to the IRS the year you sell. Capital gain on the land and site infrastructure, plus depreciation recapture on everything you wrote down over the years. Decades of appreciation on your acreage, taxed in a single April.

IRC §453 spreads that gain across years instead of eating it all at once. Less tax. More compounding. On your timeline.

You spent 20 seasons building occupancy, adding sites, and putting improvements in the ground. There's no reason to let the whole gain hit in one tax year when the code gives you a legal way to stretch it.

> ### What you CAN defer vs what you CAN'T > > CAN defer (spread over years): > - The land — usually the fattest slice on a campground, and often the cleanest cap gain > - Site infrastructure: pads, utility hookups, roads, sewer/water lines, electrical pedestals — §1250 real property > - Business goodwill and brand value > > CAN'T defer (taxed year one — I won't pretend otherwise): > - Rental cabins classified as personal property, pool/playground/amenity equipment, camp-store fixtures and inventory, golf carts, laundry machines. That's §1245 personal property. Ordinary-income recapture, due in full the year you close. > > The move: allocate the purchase price so as little as possible lands on §1245. On a land-heavy campground that line item is small — keep it that way.

The math — $4M campground sale, 20-year hold

Assumptions: $4M sale, ~$800K basis after accumulated depreciation. §1250 spreads under §453; §1245 recapture stays in year one.

Seller financing — without the risk

A normal installment sale means you finance the buyer. They stop paying, your money's gone. Real risk on a property you no longer control.

§453 flips it.

A Fortune 500-rated life carrier — Pacific Life, MetLife — holds the note and cuts your payments. Not the buyer. The carrier.

• You get the tax-spreading of seller financing.
• You carry zero buyer default risk.
• The operator's expansion stalls or the fund unwinds? Doesn't touch you. Your money already left with the carrier at closing.

Tax-smart payments, backed by an insurance giant — not the group that just bought your park.

Campground-specific wrinkles

1. Land-heavy means low recapture — use that. Campgrounds sit on a lot of acreage with relatively little depreciated improvement. That's the ideal §453 profile: most of your gain is clean land appreciation that spreads cleanly, with only a thin slice of §1245 recapture stuck in year one. Get the allocation right and almost all of it defers.
2. Cabin and glamping-unit classification is the swing factor. A cabin bolted to a foundation with permanent utilities can be §1250 real property. A rental "cabin," park model, or glamping tent/yurt treated as movable personal property is §1245 — ordinary income, year one. How your units are titled, permitted, and affixed decides whether they defer. Nail this down before you sign.
3. Site mix drives the multiple and the allocation. Transient nightly sites, seasonal sites, and annual/long-term sites trade at different cap rates and imply different goodwill vs. real-estate splits. Get the going-concern vs. real-property split right first.
4. KOA franchise agreement assignment. If you fly a KOA flag, the franchise agreement, territory, and reservation-system rights have to be assigned or terminated at closing — and buyers price that in. Whatever value attaches to the brand/franchise position is goodwill, allocated separately from the dirt. Structure it, don't bury it.
5. Entitlements and expansion upside are real value. Approved-but-unbuilt sites, expansion acreage, or utility capacity you've already permitted command a premium from consolidators. Carve that value out and allocate it — it's land-side gain and it defers.
6. Utility infrastructure allocation. Sewer, water, electrical pedestals, and road networks are buried §1250 improvements, not equipment. Don't let a buyer's allocation shove them onto the §1245 schedule where they'd be recaptured as ordinary income. That's found money in the deferral.
7. Seasonal revenue distorts the going-concern number. A park doing most of its business May-September looks different on a trailing-twelve than a Sunbelt year-rounder. Make sure the operating-business allocation reflects normalized seasonal cash flow, not a single strong or weak quarter. A buyer's underwriting model isn't your tax allocation — don't let one drive the other.
8. Camp store and rental fleet are small but real §1245. The store's coolers, POS, and shelving, plus golf carts, kayaks, and laundry machines, are personal property. It's a minor slice on most parks, but it's ordinary income the year you close. Inventory it and price it low so it doesn't drag on the deferral.

When this fits

• $1.5M+ sale (carrier minimums)
• 10+ year hold (real recapture exposure on improvements)
• Cashing out of the park entirely (no §1031)
• Consolidator or PE buyer (Sun, KOA, Blue Water, Northgate, RVC, ELS — all active acquirers)

When it doesn't

• 1031 into another park or land asset
• Sale under $1.5M
• Deal where you keep the land and sell only a low-gain operating lease

How I work

Hans Goldstein, IRC §453 specialist. Carrier-appointed brokerage with Pacific Life, MetLife, Independent Life, USAA Life — all 50 states. Free 15-minute fit-check call — bring acreage, site count and mix, cabin/glamping unit titling, basis, prior depreciation, franchise status, and offer.

Frequently asked

Q: Most of my value is in the land. Does that help or hurt with §453? A: It helps — a lot. Land is capital gain with no depreciation recapture, and §453 spreads it across years exactly the way it's designed to. On a land-heavy campground the deferrable slice is usually the majority of your gain, with only a thin §1245 tail stuck in year one. It's close to the ideal profile for this structure.

Q: I have a dozen rental cabins and some glamping units. Can those defer? A: It depends entirely on classification. Cabins on permanent foundations with fixed utilities can qualify as §1250 real property and defer. Movable park models, tents, and yurts treated as personal property are §1245 — ordinary-income recapture, year one, not deferrable. How they're titled, permitted, and affixed is the whole ballgame, so we sort it before you sign.

Q: I run a KOA franchise. Does the franchise agreement complicate a §453 sale? A: It's a solvable wrinkle, not a blocker. The franchise agreement gets assigned or terminated at closing, and the brand/territory value is allocated to goodwill separately from the real estate — both can be structured under §453. I coordinate the allocation so the franchise piece and the dirt are each handled cleanly.

Q: The buyer's allocation puts my roads and utility lines on the equipment schedule. Is that a problem? A: Yes, and it's worth pushing back on. Sewer, water, electrical pedestals, and roads are buried §1250 improvements, not §1245 equipment. If a buyer shoves them onto the equipment schedule, you'd recapture them as ordinary income in year one instead of deferring them. Correcting the allocation is often the single biggest lever on your after-tax number.

Q: I own the campground and the operating business in separate entities. Do I need two structures? A: Effectively yes — selling both triggers two taxable events, going-concern and real property. Each can be structured under §453, but each needs its own allocation and paperwork. I handle both together so the seasonal-revenue and land-value pieces are each accounted for correctly.

Educational. Not tax or legal advice.