The Price Is Not What You Keep. Talk to Your CPA Before You Pick a Structure.
Owners spend years thinking about their sale price. Far fewer spend time on what they will actually keep after taxes. That gap can be large, and it can change depending on how the sale is structured.
We are not tax advisors, and this page is not tax advice. What we can do is help you walk into your CPA's office with the right questions, the right documents, and enough time to plan. That alone can make a real difference.
Why Taxes Matter at Sale
When you sell a park you have owned for years, several kinds of tax may be involved. Your CPA will explain which apply to you, but the terms you will likely hear include:
- Capital gains: tax on the profit from selling the property.
- Depreciation recapture: over the years, you may have deducted depreciation on buildings, improvements, and equipment. When you sell, some or all of those deductions may be "recaptured" and taxed, sometimes at different rates than capital gains.
- State income tax, depending on where you live and where the park is.
- Allocation of the price between land, buildings, improvements, equipment, and other items, which can affect how each piece is taxed.
Structure matters too. An all-cash sale typically means the gain is recognized in the year of sale. An installment sale, where you are paid over time through seller financing, may spread some of the gain over the years you receive payments, under federal installment sale rules. But not everything can be spread. Depreciation recapture, for example, may still be taxed in the year of sale. Interest you receive on a note is generally taxed as ordinary income. Only your CPA can tell you how this works for you.
That is why two owners with similar parks and similar prices can end up with very different results.
What Buyers, Lenders, and Your Advisors Will Need
Documents to gather for your CPA
- Purchase records from when you bought the park: price, closing statement, and how the price was allocated.
- Depreciation schedules from your tax returns, for every year you have owned the park.
- Records of improvements: major projects with invoices, since they may affect your basis.
- Three years of tax returns.
- Your entity documents, if the park is in an LLC, corporation, or partnership.
- Existing loan documents, including payoff and any prepayment penalty.
- Any letter of intent or offer you have received.
What buyers will propose that affects taxes
- Price allocation between land, improvements, and equipment. Buyers may prefer allocations that benefit them. Your CPA should review any proposed allocation.
- Cash vs. carry terms.
- Timing of closing, which can move income between tax years.
Red flags
- Choosing a structure before talking to your CPA
- Agreeing to a price allocation without review
- Taking tax advice from a buyer, broker, or website
- Missing purchase or depreciation records
- Waiting until after you sign to ask questions
What to Check, Ask, and Document
1. Call your CPA early
Ideally a year or more before you sell. Planning takes time, and some options may only be available if you start early.
2. Find your basis records
Your basis is roughly what you paid plus improvements, minus depreciation taken. Your CPA needs records to calculate it. If you cannot find your purchase closing statement, contact the title company that handled it.
3. Bring these questions
- What is my estimated tax if I sell for all cash at this price?
- How much depreciation recapture might apply?
- Would an installment sale change my tax timing, and what would still be taxed in year one?
- How does the interest on a seller note get taxed?
- How should the price be allocated, and what allocation would hurt me?
- Does my entity structure affect any of this?
- Are there other strategies I should ask my attorney about?
- What state taxes apply?
4. Model more than one structure
Ask your CPA to run at least two scenarios, such as all cash vs. a hybrid with a seller note, so you can compare what you keep, not just the headline price.
5. Bring your attorney in too
Tax planning and deal documents go together. Your attorney drafts the agreements that put your CPA's plan into action.
Get-Ready-for-Sale Checklist
- CPA appointment scheduled well before marketing the park
- Original purchase closing statement located
- Depreciation schedules for all years gathered
- Improvement invoices organized
- Three years of tax returns ready
- Entity documents gathered
- Loan payoff and prepayment terms known
- Question list above brought to your CPA
- At least two structures modeled for net proceeds
- Attorney engaged to draft documents that match the plan
- Any proposed price allocation reviewed by your CPA
Common Mistakes
- Chasing the highest headline price without knowing what you keep.
- Choosing all cash by default without comparing alternatives.
- Assuming seller financing defers everything. Some items may still be taxed in the year of sale.
- Losing records. Missing basis records can make planning harder.
- Signing first, asking later.
- Taking tax advice from anyone who is not your CPA. Including us.
An Example
Illustrative example. Composite of situations we see; details and numbers changed.
Two owners with similar-sized parks received similar offers. Both assumed all cash was the obvious choice.
The first owner had bought decades earlier, made major improvements, and taken heavy depreciation. His CPA showed him that an all-cash sale would create a large tax bill in one year, and modeled a hybrid sale with a seller note that changed the timing of part of his gain, while noting that some recapture would still be due right away.
The second owner had bought more recently, with less depreciation. Her CPA found that all cash made more sense for her situation.
Same kind of park, same kind of offer, opposite answers. Both got there by asking first.
Want to Know What Questions to Bring?
Request a free Glitch Audit. Email wayyago@gmail.com with your last twelve months, rent roll, and whether you are leaning toward cash or open to carrying part of the price.
We will help you get your park and your paperwork ready so your CPA and attorney can do their best work. No Zoom pitch. You pay us nothing. Our 1.9% Transparency Premium is buyer-funded at closing; sellers pay 0% in brokerage fees.
Request a free Glitch AuditThis page is general education only and is not tax, legal, or accounting advice. Way-Ya-Go does not provide tax advice. Consult your CPA and attorney before making any decision about your sale.