Mineral Rights
Mineral rights are claims to ownership of natural resources beneath a parcel of land.
What are Mineral Rights?
Mineral rights cover subsurface resources such as fossil fuels (oil, natural gas, coal, etc. ), metals and ores, and mineable rocks like limestone and salt. Mineral rights are legally distinct from surface rights in the United States. The owner of surface rights has the right to utilize the land's surface for residential, agricultural, commercial, and other purposes. Mineral rights give the owner the right to own and utilize any natural resources discovered beneath the surface of the land.
Why sell Mineral Rights?
There are numerous reasons why selling mineral rights would be advantageous to you, whether for tax or estate planning purposes, or simply to obtain additional funds. Below, we highlight some of the most significant advantages of selling your mineral rights.
Tax Deferred Asset Conversion
Increased Liquidity
We all have financial needs from time to time. Mineral rights, royalties, and royalty income are valuable assets that can be sold or leased for cash. Your royalty payments are taxed in one or more of the following ways: Federal Income Tax, State Income Tax, State Severance Tax, State Property Tax or Ad Valorem Tax.
Estate Planning
It is often easier to sell an individual's assets than it is to probate an estate and manage the assets in the future. If an individual owns property in multiple states, the estate must be probated in each state, which is a costly process. It is far easier to disperse cash to heirs than it is to divide up real property.
Producing interests in oil and gas are depreciating assets. A large number of people prefer to convert these interests into appreciating assets such as real estate, equities, and certificates of deposit. Using a 1031 Exchange, minerals and royalties can be converted on a tax-deferred basis.
Reduced Workload
Ownership requires active management. The sale of your minerals or royalties will eliminate the requirement for any ongoing legal or accounting work that may have been required as a result of your ownership of the minerals or royalties. Selling your minerals will also make your tax preparation easier.
