For many bed and breakfast owners, the decision to sell isn’t just about closing a deal—it’s about finding the right buyer who values the charm, reputation, and potential of a unique business. If you’re considering selling your B&B, here are specific insights to help you navigate the process while preserving both value and confidentiality.

Unique Challenges in Selling a Bed and Breakfast

Selling a bed and breakfast differs from selling other businesses or real estate properties. Many well-intentioned real estate agents are not familiar with the best ways to value, market, or even show a B&B. Unlike traditional homes or commercial spaces, a B&B’s buyer often comes from outside the immediate area, looking for a business that offers both income and a lifestyle. Simply listing a B&B on a real estate MLS could compromise confidentiality and potentially harm the business’s reputation if guests or locals see it’s for sale. Instead, specialized marketing to attract buyers who appreciate hospitality and are willing to relocate may be essential.

Importance of Good Maintenance, Positive Reviews, and Growth Potential

A clean, well-maintained property with strong online reviews—especially on sites like TripAdvisor, Google, and Yelp—can significantly boost buyer interest and perceived value. Positive reviews and high occupancy rates indicate to potential buyers that the B&B is not only profitable but also highly regarded by guests. Additionally, buyers are often interested in growth potential, which may include:

• Extending the Season: If the B&B currently operates seasonally, there may be an opportunity to open year-round or expand peak periods to increase revenue.
• Adding Services: Offering additional services like spa treatments, local tours, or event hosting (e.g., weddings or corporate retreats) can drive new revenue streams.
• Exploring Short-Term Rentals: Some buyers may consider converting part of the B&B to short-term rentals on platforms like Airbnb, especially if local zoning permits this. This approach can reduce the need for daily management while maintaining guest income.

Financial Structure and Tax Implications of a B&B Sale

Due to the nature of bed and breakfasts, which often have a high ratio of real estate to cash flow, buyers may face more challenging financing options. SBA loans are sometimes used, but the business's cash flow relative to the property’s asset value may require more upfront cash from the buyer.

Typical Tax Breakdown for a B&B Sale

Let’s say you originally purchased your B&B property for $1 million, with $700,000 allocated to the building and $300,000 for the land.

• Depreciation: Over the years, you’ve taken $200,000 in depreciation deductions on the building.
• Adjusted Basis: With depreciation, your adjusted basis becomes $800,000 ($1 million original purchase price - $200,000 depreciation).
• Sale Price: You sell the B&B for $1.5 million, resulting in a capital gain calculated as the sale price ($1.5 million) minus the adjusted basis ($800,000), which gives you a $700,000 capital gain.
  • Capital Gains Tax: The $700,000 capital gain will likely be subject to long-term capital gains tax rates of 15%-20%.
  • Depreciation Recapture: The $200,000 in depreciation you’ve claimed over the years will be “recaptured” and taxed at a rate of up to 25%.

Summary of Tax Liabilities:

• $700,000 of capital gains at 15%-20% (depending on your total income).
• $200,000 of depreciation recapture taxed at up to 25%.

This example highlights the importance of factoring in both capital gains and depreciation recapture when planning a sale. Consulting with a tax advisor early on can help you plan effectively and consider ways to minimize tax impact.

How Unbroker Can Help

Unbroker is built to support owners of bed and breakfasts in navigating the unique challenges of selling. We understand the nuances of B&B valuation, confidentiality, and marketing. Our process is designed to help you:

• Reach Qualified Buyers: Through targeted marketing, we aim to attract buyers who are actively seeking hospitality businesses like yours, often from outside the local area.
• Maintain Confidentiality: We help keep your business’s reputation intact by not listing on public MLS and by using discreet methods that protect your B&B’s standing.
• Simplify the Process: With lower fees and streamlined support, we ensure you keep more of your gains while managing a smooth transition.

Selling a bed and breakfast can be a rewarding experience with the right preparation. By understanding the steps, financial considerations, and marketing strategies involved, you can find the ideal buyer who values what you’ve created and sees the potential to grow. Ready to begin? Unbroker is here to guide you every step of the way.