Buying Texas Land/No Mineral Rights

[sqiggy]

Let me clairify, if it is a producing unit property taxes will be imposed on the minerals. If you received payments, you will have to pay income taxes.

That's not what he was asking. He was asking if you own the mineral rights on a piece of property, with no wells on it, can it still be taxed? Just owning the mineral rights, nothing more.

[aggieman08]

That's not what he was asking. He was asking if you own the mineral rights on a piece of property, with no wells on it, can it still be taxed? Just owning the mineral rights, nothing more.

If you go back and read the original question, he asks:

“Should a seller keep his mineral rights if he sells the land? Will the tax man ever come in and tax you on unused minerals?”

Minerals that are still in the ground in a producing unit get taxed as property. That’s what he asked, that’s what I answered and Squiggy you are welcome.

[sqiggy]

Will the tax man ever come in and tax you on unused minerals?”

And I am reading into it that if a person owns the rights, will they ever be taxed on that alone. Now, the only person that can clear this up is stinkbelly himself!!
And you are welcome!!

[Aggiehunter08]

If you go back and read the original question, he asks:

“Should a seller keep his mineral rights if he sells the land? Will the tax man ever come in and tax you on unused minerals?”

Minerals that are still in the ground in a producing unit get taxed as property. That’s what he asked, that’s what I answered and Squiggy you are welcome.

Just sell them and I’ll handle the taxes

[oktx]

Wait. I was asked if minerals could be taxed. I was assuming Stinkbelly meant not in production. I said, I don’t think so. Then I’m told yes you can. Which is it?

[Darton]

I think it is important for anyone who does business to realize that having a trusted advisor to help you deal with these things is paramount! In the end the most expensive advice is free advice, and if you have a budget you can’t afford mineral rights even if they are available! Being realistic in any endeavor is the best practice!

[TexasTK]

It is not that complicated, whether you own the minerals or not there is no taxes unless it is a producing property.

[aggieman08]

And I am reading into it that if a person owns the rights, will they ever be taxed on that alone. Now, the only person that can clear this up is stinkbelly himself!!
And you are welcome!!

Good, since we are all welcome, who wants a beer?

[aggieman08]

Wait. I was asked if minerals could be taxed. I was assuming Stinkbelly meant not in production. I said, I don’t think so. Then I’m told yes you can. Which is it?

It’s a little of both. If the unit is not in production you will not have property taxes levied against you. If the unit is in production, you will have property taxes levied against you for what is still in the ground although those minerals have not been extracted (produced) and sold yet. Kind of like inventory.

Lastly, any minerals that are produced (extracted) and sold are subject to federal income tax and you will most likely receive a 1099 from the production company.

[oktx]

It’s a little of both. If the unit is not in production you will not have property taxes levied against you. If the unit is in production, you will have property taxes levied against you for what is still in the ground although those minerals have not been extracted (produced) and sold yet. Kind of like inventory.

Lastly, any minerals that are produced (extracted) and sold are subject to federal income tax and you will most likely receive a 1099 from the production company.

So I was correct? I think everyone knows that if you have income, ie, royalties you will be taxed.

[aggieman08]

So I was correct? I think everyone knows that if you have income, ie, royalties you will be taxed.

I assume so with this last post. Several posts back when you asked if the minerals can be taxed even before they are pulled from the ground, my answer remains the same.

[mikeaddy]

If you buy land that does not include the mineral rights, it is important to know that Texas law states that the mineral lessees (oil and gas companies) have the right to manipulate the surface of your land, as much as “reasonably necessary”, for mineral exploration or production.