Selling a campground or RV park in Canada

A campground or RV park is a seasonal business sitting on a large piece of land, often with its own water and septic systems. Buyers and their lenders look at the bookings, the land and the infrastructure together. Here is what to expect, how to prove your numbers and how the taxes usually work, with British Columbia examples.

What buyers look at first

Most campground buyers ask the same questions early. Have clear answers ready before you list:

• Sites. How many sites you have, how many are full hookup, power only or unserviced, plus any tent sites, cabins, yurts or park model rentals.
• Revenue by type. Three years of sales split into nightly and weekly stays, monthly stays and seasonal sites, by month, with occupancy for the busy season.
• Other income. The camp store, firewood, propane, laundry, showers, boat or kayak rentals, storage of trailers and boats over winter, and any events.
• Costs. Wages, power, water testing, septic pumping, garbage, insurance, property tax, reservation software and booking fees, and repairs.
• The season. When you open and close, how much is booked ahead for next year, and how many seasonal campers come back each year.
• Your time. Whether you live on site, how many hours you and your family cover, and who handles night calls and the office.

Buyers will check these during due diligence, so it helps to gather them now. Our list of documents needed to sell a business is a good start.

Proving the numbers

Your reservation system holds most of the proof a buyer wants. Keep monthly reports of site nights sold, revenue by site type and deposits taken for future stays, and make sure they match your bank deposits, card processor statements, GST and PST returns and tax returns. Seasonal fees paid in one lump sum, often in the spring, should be shown in the month they were earned as well as the month they were paid, so a buyer sees the real season.

Cash from walk in campers, firewood and showers should be recorded and deposited like everything else. If you cannot show a sale on paper, most buyers and lenders will not pay for it. If you and your family run the office, mow and clean washrooms without a wage, list those hours and what it would cost to pay someone, and show personal costs run through the business as add-backs with proof.

Seasonal and long term campers

Seasonal campers are often the steadiest income, and buyers value a long waiting list. Give a list of seasonal sites with the fee, the term, how many years each camper has returned and what is written down. Use written seasonal agreements that set the dates, what can be built on the site, winter storage and when the site must be cleared.

Be clear about anyone who lives on site all year. The Residential Tenancy Branch's Policy Guideline 9 says the Manufactured Home Park Tenancy Act is not meant for seasonal campgrounds used for temporary stays, but it may apply when an RV in a park or campground is someone's permanent primary residence, for example with permanent hookups, decks or skirting the owner allowed, and year round living. Tenants have more rights than campers, which a buyer will price in, so list these sites honestly and ask your lawyer how they are treated.

The land, water and septic

For most campgrounds the land is a large part of the price. Gather the title, survey, zoning and any permit that sets how many sites are allowed, BC Assessment notices, property tax bills, building and electrical permits for past work, and any environmental or flood reports. Waterfront and riverside parks should have any water lot lease, foreshore or dock permits ready too.

Many campgrounds run their own water and septic. In BC, a water supply system that serves a campground generally needs an operating permit from the local health authority, and section 7 of the Drinking Water Protection Act says operating permits are not transferable. The buyer usually applies for a new one as the new owner, so share recent water test results, the permit and its conditions, and talk to the health authority well before closing. Keep septic records, pump out dates and any sewage system filings, since buyers often bring in their own inspector.

List the washrooms, shower buildings, roads, the electrical service and site pedestals, the well pumps, the store, staff housing, mowers, golf carts and other equipment, with ages and whether anything is leased or financed. If there is a mortgage or equipment loan, plan how it will be paid out at closing; see selling a business with debt and selling a business and the building.

Campgrounds on farm land

If any of the property is in BC's Agricultural Land Reserve, check what the campground is allowed to do. Under section 33 of the ALR Use Regulation, accommodation tied to an agri tourism activity is permitted on land classed as a farm, but only for up to 10 sleeping units in total, including RV sites, tents and cabins, on a seasonal or short term basis, using less than 5% of any parcel. A larger campground in the ALR usually needs an approval from the Agricultural Land Commission, and local zoning can add its own limits. Have the approval or zoning letter ready, since a buyer and their lender will ask whether every site is allowed.

Bookings, the website and staff

The reservation software, website, domain, phone number, reviews, online booking listings and any club or group accounts are part of what a buyer pays for. Write the handover into the purchase agreement, and agree how deposits for next season are credited to the buyer at closing. Our guide to transferring contracts, licences and permits has a checklist, including the business licence and any liquor licence for a lounge or store.

Campgrounds often rely on seasonal staff and live in hosts. In British Columbia, section 97 of the Employment Standards Act says that when a business is sold, the employment of an employee is considered continuous, so a buyer who keeps your staff takes on their years of service. See what to tell employees.

Guest and camper records include personal information. In British Columbia, section 20 of the Personal Information Protection Act lets a business share personal information with a prospective buyer without consent, but only if it is needed to decide whether to go ahead and the buyer agrees to use it only for the deal. Share totals and summaries first, under a confidentiality agreement, and hand over full records at closing.

Taxes on sites, cabins and the sale

Under the Excise Tax Act, a campsite rented to the same person for less than one month is camping accommodation and is taxable for GST/HST, including water, power and sewer hookups supplied with the site. Longer stays can be treated differently, so a buyer's accountant will check how your monthly and seasonal sites were handled.

In BC, the Province says accommodation in tents is exempt from PST and MRDT, and the province's campground association says campsite and RV site rentals are not charged PST. Cabins, yurts and rental trailers with a bed, linen, power, plumbing or heat are generally taxable accommodation, with 8% PST and up to 3% Municipal and Regional District Tax (MRDT) in participating areas. Firewood, propane and store sales have their own rules. A buyer will want to see these were charged and filed correctly.

When the land is sold, the buyer pays BC property transfer tax when the title is registered: 1% of fair market value up to $200,000, 2% from $200,000 to $2,000,000 and 3% above $2,000,000. It is based on the land and buildings, not goodwill or equipment, which is one reason the price split matters. Share sales can be taxed differently, so ask your lawyer; see asset sale vs share sale.

When a registered buyer acquires all or substantially all of what is needed to carry on the business, the section 167 election on Form GST44 can often remove GST/HST on the sale, and a registered buyer of commercial real property often accounts for the GST/HST on the property themselves. In British Columbia, PST generally applies to taxable goods in the sale such as equipment and golf carts, but not to goodwill, and the Province says a buyer should get a PST clearance certificate before buying a business. Your accountant should work through this for your deal; see GST and PST when selling and taxes when selling a business.

A simple worked example

These numbers are made up and rounded for illustration only. Your own deal, timing and tax will differ.

Questions to take to your lawyer and accountant

• Should this be an asset sale or a share sale, and how does property transfer tax apply either way?
• How should we split the price between land, buildings, equipment and goodwill?
• Have GST, PST and MRDT been charged correctly on sites, cabins, the store and seasonal fees, and can we use the section 167 election?
• Are all our sites allowed under zoning and any ALR rules, and is any approval needed for the buyer?
• Are any long term sites likely to be tenancies under the Manufactured Home Park Tenancy Act?
• What does the buyer need for a new water system operating permit, and how long will it take?
• How are next season's deposits and seasonal fees handled at closing?

Rules and rates change, so confirm current requirements with the Province of BC, your health authority, your local government and the Canada Revenue Agency before you set dates. For more, read what your lawyer and accountant do. Selling a motel or inn instead? See selling a motel or small hotel in Canada. Selling a store or gas bar on the same land? See selling a convenience store. This guide is general information, not legal or tax advice for your situation. Questions about listing with us go to hello@sellmybusinessdirect.com.