mineral-rights-recorder

Like many different kinds of highly valuable property, mineral rights must be recorded with a government official. Similar to real estate or automotive purchases, mineral rights can transfer between owners, but only once the official paperwork has been documented and signed.

As there are many questions regarding any legal stipulations about land ownership, we’ve put together this guide to help clear some things up below the Earth’s surface. In this glossary and FAQ, we will define some of the most commonly used terms in official mineral rights records before providing additional resources to help localize your questions and answers.

What are mineral rights?

If you are just getting up to speed with your purchased or inherited land, first you must understand what it means to own mineral rights. Available as part of a fee simple estate, or purchased separately in a split estate, mineral rights entitle the owner to any valuable resources that can be found beneath the earth.
Most commonly, mineral rights are associated with oil and gas used for energy, manufacturing, and more. Mineral rights are not available in all areas, available only to Americans, Canadians, and residents of a handful of other countries.

How are mineral rights recorded?

Officially, mineral rights are recorded with a mineral rights deed. If you own your land in a fee simple estate, then there may not be a separate deed for your subsurface rights, but rather it will be designated as part of your whole property. Knowing this, it is important to completely understand what property rights are being conveyed in the event of a sale or purchase.

Physically, mineral rights records exist in a government office or digital database. Copies of deeds are often kept by local governments so as to retain a record and solve any disputes about the property. A copy should also be kept by the mineral rights holder so that he or she can legitimize ownership before entering into an oil and gas lease.

What is a recorder of deeds?

A recorder of deeds in a government official, office, or entity that is responsible for the processing and maintenance of public record deeds. While almost all deeds are recorded physically, in-person, the practice of digital databases for mineral rights deeds has only become more prevalent since the turn of the 21st century.

How to Find your Recorder of Deeds

It is very easy to find your local recorder of deeds before entering into a property transaction. If you live in a city, check with the city office. If you live outside of town, which is much more common for mineral rights negotiations, then it is likely that your recorder of deeds will be at the county level.
Deed recording practices vary heavily from state to state. If you are in an area that is currently being used for oil, gas, or other resource production, then your local office may have a designated recorder of deeds solely for mineral rights transactions.

What does the recording of a deed do?

Whenever a deed becomes recorded, the property owner can officially claim the rights to whatever is described in the document. Recording typically occurs during the transfer of ownership from one individual or entity to another. Once a deed is recorded, mineral rights owners are then free to enter oil and gas leases to receive mineral royalty payments for the valuable resources extracted and sold from the property.

Are recorded deeds public information?

Yes, more often than not, recorded deeds are considered to be public information. While not just anyone can access them, deed recordings are necessary to be considered public information in the event of a legal dispute or future transfer of ownership.

Are unrecorded deeds valid?

Surprisingly, unrecorded deeds are still considered valid in many states across the country. So long as the buyer and the seller have agreed to terms, an unrecorded deed may still be valid if the new owner wants to pursue new ventures with the land itself. With public records, however, some difficult scenarios can arise if someone were to impersonate a deed owner.

When should I record my mineral rights deed?

We recommend recording your mineral rights deed as soon as possible after you purchase your new property. In doing so, the world will become aware of the new owner, and oil and gas companies may begin to contact you with lease offers. However, mineral rights deeds in some states may not be legally required to be recorded under any specific time period. Therefore, you can take several months or years before officially recording your deed.

oil-gas

Oil and gas revenue checks are everyone’s favorite part about mineral rights ownership. With money in the mail, oil and gas revenue checks are a great way to earn passive income from an investment in mineral rights.

In this complete guide, we will cover some of the most frequently asked questions about oil and gas revenue checks to help current and future mineral rights owners understand what to expect. After defining a few terms, we will go into detail about some of the average statistics that surround oil and gas revenue checks.

What are oil and gas revenue checks?

First and foremost let’s define what we are talking about here. Oil and gas revenue checks are monthly states that are given to the owner or partial owner of active mineral rights. Oil and Gas revenue checks may also be called “oil and gas royalties” or “oil and gas royalty statements.”

Today, most oil and gas revenue checks are still sent physically in the mail. Typically, they show a full picture of the month’s operation, resource price, ownership percentage, and actual check dollar amount.

Who sends out oil and gas revenue checks?

Oil and gas revenue checks are typically sent out by the operator or producer. In the largest oil and gas operations, companies will utilize either an in-house or third-party revenue distributor. More often than not, oil and gas revenue checks may be the only interaction between the actual extraction company and the person or entity that receives the check.

How do you get an oil and gas revenue check?

To receive an oil and gas revenue check, one must have a stake in an active and producing oil and gas operation. Most commonly, this occurs when a mineral rights owner enters into an oil and gas lease agreement for a company to locate, extract, and sell valuable resources from the owned property. Oil and gas royalty checks are typically mailed via the US Postal Service in discreet packaging.

How often are oil and gas revenue checks sent?

Across the United States, the industry standard for oil and gas revenue checks is a monthly recurring payment. If you are not a mineral rights owner, and rather have an overriding royalty interest in an oil and gas operation, then it may be possible that you only receive a one-time revenue check after you participate in the process.

How much do you get paid in an oil and gas revenue check?

Technically, there is no limit on the amount of money that you can be paid in an oil and gas royalty check. The exact figure that you will receive is based on a predetermined amount as defined in your mineral rights lease agreement contract. In most scenarios, this is expressed as a fixed percentage of the total sales revenue of an operation each month.

Most commonly, oil and gas revenue checks are paid to about 12.5% or one-eighth of the total monthly profit. More often than not, this is then divided among multiple mineral rights owners on a large, active property. In some states, there are legal minimum oil and gas royalty compensation percentages.

What is the minimum amount of an oil and gas revenue check?

In most oil and gas leases, there will be a predefined amount of money that must accumulate before a revenue statement is sent to a mineral rights owner. If an operation has been slowed due to seasonality, weather, or other condition, months in which production and sales do not meet the minimum threshold will generally cause producers to temporarily withhold payments.

What taxes are paid on oil and gas revenue checks?

There are a considerable number of taxes that may be applied to any given oil and gas revenue check, with total value varying depending on your location. Most commonly, it is not unusual to see severance taxes, conservation taxes, state taxes, and more on a monthly oil and gas revenue check. Although it may not be significant, revenue checks may be taxed at rates up to 10% across the country.

Why are there deducted items from an oil and gas revenue check?

Unlike some products, oil, gas, and other natural resources must undergo a significant amount of modification and processing before becoming ready to market and sell. For this reason, oil and gas operations incur significant expenses between the extraction and sale stages. These process costs are divided among stakeholders and credited to revenue checks based on actual expenses. Most commonly, deductions may represent costs associated with dehydration, compression, gathering, processing, and treating the minerals.

We are all in this together, right? Sometimes bringing people together to operate as one can be a better overall solution than everyone fighting their own individual fight. This is especially true if everyone involved has one common goal.

In this comprehensive guide, we will define and explain everything you need to know about oil and gas unitization, its consequences, and what to consider when pooling your oil and gas rights with neighboring tracts.

Oil and Gas Unitization

In the world of mineral rights such as oil and gas, unitization and pooling are used to bring landowners and lessors together to maximize the value of an oil and gas operation. Oil and gas unitization can be brought on by the landowners themselves, mineral rights operators, as well as local governments.

As oil reserves are found below the earth, it is very common that large crude oil supplies may span the jurisdiction of several property owners on the land’s surface area. In cases like this, gas and oil unitization is often necessary for the resources to be extracted in a safe, fair, and efficient manner.

What is Unitization of Oil and Gas?

For all accounts and purposes, oil and gas unitization can be defined as forming and combining into one singular entity. Unitization is a mathematical term with many real-life examples. Most commonly, however, unitization is used in the combination of mineral rights or mineral leases.

What is an Oil and Gas Unit?

An oil and gas unit is the end product of unitization. Essentially what this means is that anything that has been unitized (i.e. two different parcels of land), forms together to create a new, single unit.

At oil and gas drilling sites, a unit describes the legal boundary of the total consolidated land area.

Oil and Gas Pooling

 

What is Pooling of Oil and Gas?

Oil and gas pooling is another term for the unitization of land or leases. With this, units can also be referred to as “pools.” Gas and oil pooling is used in the sense of combining efforts into one whole, such as in carpooling, rather than referring to crude oil as a liquid (i.e. swimming pool).

The Declaration of Oil and Gas Pooling

Officially, oil and gas units must be documented in a legally binding contract often referred to as “the Declaration of Pooling.” This document may have a different title depending on the location, but a detailed description of the oil and gas unitization must be submitted to local jurisdictions before they are taken into effect.

The Consequences of Oil and Gas Pooling

Just as a mineral rights lease agreement can be a very complicated document, a declaration of oil and gas pooling agreement should also be reviewed in detail before signing on the dotted line.

Although we have explained several of the positive consequences of pooling that make the practice entirely necessary, there also may be negative effects of gas and oil unitization for individual property owners. Most commonly, this includes lesser oil and gas royalty payments or quick depletion of total resource reserves.

Compulsory vs Voluntary Pooling of Oil and Gas

If you’re getting offers to pool your oil and gas royalties with neighboring tracts, the decision may or may not be up to you as to whether or not the unitization will happen. For this reason, it is entirely necessary to determine the nature of your oil and gas pooling agreement before jumping to conclusions.

Voluntary Pooling – Voluntary pooling of oil and gas is ideal because it only exists to benefit the stakeholders of the agreement. If you are given the choice to join a neighboring unit, this may lead to oil and gas royalty payments without any direct extraction from your property.

Compulsory Pooling – Compulsory pooling, also known as mandatory pooling, is the forced unitization of oil and gas rights generally brought on by local governments. Forced pooling orders are often put in place to limit the total amount of oil and gas wells that can be drilled on the surface of a county or state.

Oil and Gas Pooling Clauses

In most modern oil and gas lease agreements, operators will include a “pooling clause,” which outlines both parties’ rights through the duration of the contract. With this, expectations can be made at the beginning of the pooling agreement so as not to erupt any unwelcome surprise later.

If your oil and gas lease agreement has a pooling clause that allows operators to unite your mineral rights with neighboring tracts, be sure that you understand the consequences of this both for better or for worse. In some cases, pooling oil and gas is entirely necessary in order to receive mineral royalties, however, it is important to understand that you will now be “sharing” your oil and gas rights.

Nursing homes are a critical part of our society, however, that does not mean that everyone is capable of running one. Despite their crucial role in the life cycle of humanity, nursing homes are rarely profitable business due to their ongoing expensive upkeep.

If you are the building or business owner of a nursing home, selling may become a more attractive option in each year of operation. Today, there are more resources than ever available for nursing homeowners to find a buyer and sell their property for a large sum of money. Of course, that sale is going to be taxed, so don’t start celebrating too early.

In this quick guide, we will show you how to maximize the sale of a nursing home step by step with a 1031 exchange. Whether you are an individual taxpayer or an operating business entity, a 1031 exchange can be used to minimize capital gains taxes paid when investing in a new property asset.

How to Sell A Nursing Home

To start, selling your nursing home is likely going to be the most difficult part of the 1031 exchange process. While some businesses don’t go a day without someone asking to buy them out, it is very rare that individual investors will approach a nursing homeowner in order to acquire the property and business. Instead, nursing homes are sold through outbound marketing techniques, which usually includes the help of an intermediary or private equity firm.

Selling a nursing home is typically not a quick process. Most nursing homes remain on the market for months and sometimes years, depending on the location. While some property developers may be able to convert the nursing home into a profitable entity, there are also many local restrictions that prevent nursing homes from changing forms so as to ensure the health of seniors in the area.

Determining the Value of Nursing Homes

Although the initial selling price is likely to be determined by a third-party intermediary, there are a few things to consider when trying to find the approximate value of a nursing home. In most cases, nursing homes change hands while continuing to operate as a business and residence for those living onsite. While you can’t put a price on human life, the following should be considered when determining the initial value of a nursing home:

  • Building size and condition
  • Property size, condition, and zoning laws
  • Number of current tenants, and/or waiting list
  • Pay, ownership, or leasing structure
  • Asset quantity and condition (furniture, appliances, etc.)
  • Strategic vendor partnerships
  • And more

In many ways, selling a nursing home is like selling an apartment building, community center, and hospital all at the same time. With this in mind, nursing homes are typically sold for over a million dollars in most major cities. Today, nursing homes are much more likely to be sold B2B rather than to an individual taxpayer.

Taxes Paid on Selling Nursing Homes

Upon selling a nursing home for a considerable amount of money, large taxes are applied to both individual sellers and businesses liquidizing such a large asset. In fact, total taxation is likely to reach up to 40% of the initial selling price in some parts of the country. Once sold, the following are typically applied to nursing home transactions:

  • Federal Income Taxes
  • Capital Gains Taxes
  • Sales Taxes
  • Local Taxes
  • And More

Of course, smart investors know a few ways to minimize taxation with completely legal methods offered by the IRS. For instance, 1031 exchanges can be utilized to completely defer capital gains taxes that would otherwise be applied to the sale of a nursing home.

Selling Nursing Homes with a 1031 Exchange

A 1031 exchange makes it possible to lower taxes on the sale of a nursing home with the acquisition of a new like-kind property. If the new property is of equal or greater value than the nursing home, all capital gains taxes will be deducted. In the same vein, lower-valued assets make it possible to mitigate a portion of the capital gains taxes otherwise paid.

Nursing Homes Like-Kind Properties

When it comes time to explore new properties, taxpayers and businesses have a lot of freedom to choose many different types of assets to purchase in the 1031 exchange. The IRS has designated in the 1031 exchange code that new properties must be of “like-kind,” however arguments can be made for most personal property types. Both physical and intangible assets like the following can be purchased after the sale of a nursing home in a 1031 exchange:

  • Mineral rights and royalties
  • Water and ditch rights
  • Apartment buildings and condos
  • Hospital equipment
  • Office furniture
  • Farmland, livestock, etc.
  • Wetland mitigations credits
  • And much more

Of course, highly-valued assets like nursing homes have an enormous amount of potential when considering the tax-free acquisition of a new large asset.

Nursing Homes 1031 Exchange Timeline

Like we said earlier, nursing homes can take a considerable amount of time to sell. Once the deed of sale has been signed, however, the clock begins ticking on a [person or entity’s eligibility for the 1031 exchange. In order for the new acquisition to be valid in a 1031 exchange, a new asset must be purchased within 180 days (approximately 6 months) of the sale.

1031 Exchange Intermediaries for Selling A Nursing Home

With pressing deadlines and endless paperwork (most of which we are afraid to mention), most nursing home sellers use a specialty 1031 exchange intermediary to facilitate the sale and tax process. In doing so, investors can spend more time and less money on their business transition.

Why Purchase Mineral Rights and Royalties?

Despite only being available in a handful of countries, many American investors are unaware of the unique opportunity they have in owning mineral rights. By purchasing mineral rights in a 0131 exchange, former nursing homeowners can develop a steady stream of passive royalty payments in exchange for leasing their rights to an oil and gas company. As a drastically different business model than a nursing home, mineral rights are a great way to retain the most from a sale while paving a path for ongoing financial freedom.

Senior housing is a critical part of our society, however, that does not mean that everyone is capable of running one. Despite its crucial role in the life cycle of humanity, senior housing is rarely a profitable business due to its ongoing expensive upkeep.

If you are the building or business owner of senior housing, selling may become a more attractive option in each year of operation. Today, there are more resources than ever available for senior homeowners to find a buyer and sell their property for a large sum of money. Of course, that sale is going to be taxed, so don’t start celebrating too early.

In this quick guide, we will show you how to 1031 exchange senior housing in order to maximize the sale. Whether you are an individual taxpayer or an operating business entity, a 1031 exchange can be used to minimize capital gains taxes paid on the sale of senior housing.

How to Sell A Senior Housing

Before you can 1031 exchange senior housing, you will first need to sell it. Selling your nursing home is likely going to be the most difficult part of the 1031 exchange process. While some businesses don’t go a day without someone asking to buy them out, it is very rare that individual investors will approach a senior homeowner in order to acquire the property and business. Instead, senior housings are sold through outbound marketing techniques, which usually includes the help of an intermediary or private equity firm.

Selling senior housing is typically not a quick process. Most senior housings remain on the market for months and sometimes years, depending on the location. While some property developers may be able to convert senior housing into a profitable entity, there are also many local restrictions that prevent senior housings from changing forms so as to ensure the health of seniors in the area.

Determining the Value of Senior Housings

Although the initial selling price is likely to be determined by a third-party intermediary, there are a few things to consider when trying to find the approximate value of a senior housing. In most cases, senior housing change hands while continuing to operate as a business and residence for those living onsite. While you can’t put a price on human life, the following should be considered when determining the initial value of senior housing:

  • Building size and condition
  • Property size, condition, and zoning laws
  • Number of current tenants, and/or waiting list
  • Pay, ownership, or leasing structure
  • Asset quantity and condition (furniture, appliances, etc.)
  • Strategic vendor partnerships
  • And more

In many ways, selling a nursing home is like selling an apartment building, community center, and hospital all at the same time. With this in mind, senior housings are typically sold for over a million dollars in most major cities. Today, senior housings are much more likely to be sold B2B rather than to an individual taxpayer.

Taxes Paid on Selling Senior Housings

Upon selling senior housing for a considerable amount of money, large taxes are applied to both individual sellers and businesses liquidizing such a large asset. In fact, total taxation is likely to reach up to 40% of the initial selling price in some parts of the country. Once sold, the following are typically applied to senior housing transactions:

  • Federal Income Taxes
  • Capital Gains Taxes
  • Sales Taxes
  • Local Taxes
  • And More

Of course, smart investors know a few ways to minimize taxation with completely legal methods offered by the IRS. For instance, the 1031 exchange can be utilized to completely defer capital gains taxes that would otherwise be applied to the sale of senior housing.

How to 1031 Exchange Senior Housing

A 1031 senior housing exchange makes it possible to lower taxes on the sale with the acquisition of a new like-kind property. If the new property is of equal or greater value than the senior housing, all capital gains taxes will be deducted with the 1031 exchange. In the same vein, lower-valued assets make it possible to mitigate a portion of the capital gains taxes otherwise paid.

Senior Housings Like-Kind Properties

When it comes time to explore new properties, taxpayers and businesses have a lot of freedom to choose many different types of assets to purchase in the 1031 senior housing exchange. The IRS has designated in the 1031 exchange code that new properties must be of “like-kind,” however arguments can be made for most personal property types. Both physical and intangible assets like the following can be purchased after the sale of senior housing in a 1031 exchange:

  • Mineral rights and royalties
  • Water and ditch rights
  • Apartment buildings and condos
  • Hospital equipment
  • Office furniture
  • Farmland, livestock, etc.
  • Wetland mitigations credits
  • And much more

Of course, highly-valued assets like senior housings have an enormous amount of potential when considering the tax-free acquisition of a new large asset.

Timeline For a 1031 Senior Housing Exchange

Like we said earlier, senior housings can take a considerable amount of time to sell. Once the deed of sale has been signed, however, the clock begins ticking on a person or entity’s eligibility for the 1031 exchange of senior housing. In order for the new acquisition to be valid in a 1031 exchange, a new asset must be purchased within 180 days (approximately 6 months) of the sale.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

Using an Intermediary to 1031 Senior Housing

With pressing deadlines and endless paperwork (most of which we are afraid to mention), most senior housing sellers use a specialty 1031 exchange intermediary to facilitate the sale and tax process. In doing so, investors can spend more time and less money on their senior housing transition.

What’s the Best 1031 Exchange For a Senior Housing?

Despite only being available in a handful of countries, many American investors are unaware of the unique opportunity they have in owning mineral rights. By purchasing mineral rights in a 1031 exchange of senior housing, former senior homeowners can develop a steady stream of passive royalty payments in exchange for leasing their rights to an oil and gas company. As a drastically different business model than senior housing, mineral rights are a great way to retain the most from a 1031 exchange while paving a path for ongoing financial freedom.

For the past 20 years, software has slowly risen to become one of the highest valued industries in the world. With global potential and minimal starting costs, tech entrepreneurs everywhere have made millions of dollars with the development and deployment of software.

While many choose to sell software as a service (SaaS), other free software like apps and online marketplaces can sell advertisements for ongoing revenue streams. As a successful product on the market, software owners have the choice of either maintaining their service or selling the company that the software supports.

When choosing to sell, software can yield enormous cash flows for the purchase of cutting-edge or popular technologies. With this, considerable taxation is usually applied, some of which can be avoided with a 1031 exchange.

In this article, we will explain how to 1031 exchange software. With this, we will explore like-kind properties such as mineral rights and royalties for maximum returns on the software sale.

How to Sell Software

Before you can 1031 exchange software, you will first need to sell it. There are hundreds of thousands of jobs for software sales in the United States, although most of these are based around user acquisition. If you are the owner of a piece of software (i.e. you built it or bought it, then you have every right to sell your intellectual property, hardware, userbase, and more in a full transfer of ownership.

Depending on the quality of your product, it is generally not difficult to find buyers. In fact, many software developers in the startup universe simply built products just to sell them for enormous profits at later dates. If your “company” is nothing more than some of the best code ever written, then you will likely be selling simply the software’s “IP” in the event that there are no employees or pieces of hardware necessary to maintain the program.

Determining the Value of Software

Software and software companies are constantly being sold on the open market at an immense range of valuations. National and local headlines in tech industry blogs often cover software sales, so it is relatively easy to estimate the approximate worth of your software ware. Of course, the value of software is largely intangible, with an enormous focus being put on the software’s potential, rather than its current condition.

The following attributes should be considered when determining the value of software:

  • Current availability (on-market or off-market)
  • Number of users (if applicable)
  • Software cash flow (current and future projects)
  • Potential revenue streams
  • Integration with purchasing entities systems and IP
  • And more

Taxes Paid on Selling Software

Although many will tell you that they’ve been burst by the dot com bubble one too many times, software sales continue to earn developers large amounts of money every year in the United States. If done legally, software sales are subject to significant taxation from the local and national government. For big sales, capital gains taxes may be applied at rates as high as 20% of the transaction value.

How to 1031 Exchange Software

A 1031 exchange of software is an IRS designated transaction that allows taxpayers to defer up to 100% of the capital gains taxes applied to the sale. In order to eliminate every dollar of the capital gains tax, sellers must acquire a new asset of equivalent or greater value in order to 1031 exchange software. Here, the 1031 exchange essentially allows individuals to “trade up” their software for a new property.

Of course, if you sold your software at such a high price that you never have to work another day in your life, it is possible to acquire an asset at a lower valuation. With this, partial capital gains taxes can be deferred.

Software Like-Kind Properties

Despite the fact that software and software companies are largely intangible, the IRS views their IP as simple personal property, just like most of the things that are bought and sold on the open market. Under the 1031 exchange code, software sales must be followed by purchases of “like-kind” property for a valid transaction and tax deferment. Like-kind properties for software or software companies may include:

  • Collectibles (cars, toys, etc.)
  • Boats
  • Vacation Rentals
  • Convenience Stores
  • Trailer Parks
  • Water and Ditch Rights
  • Mineral Rights and Royalties
  • And more

Timeline For a 1031 Software Exchange

From the exact day of the sale, sellers have 45 days to identify at least one reasonable property to purchase in a 1031 software exchange to remain eligible for the transaction. Up to two more properties can be considered regardless of their value, and purchase must be made within 180 days of the sale.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

Using an Intermediary to 1031 Exchange Software

It has become increasingly common for investors to utilize specialized 1031 exchange intermediaries when selling high-value software. With an intermediary, it can be much easier to handle all negotiations, paperwork, and exploration for new properties in a 1031 exchange.

What’s the Best 1031 Exchange For a Software?

If you are about to 1031 exchange software, you’ll find a wide variety of new assets to choose from. Although options are limitless for personal assets in the United States, mineral rights are one of the best properties to acquire in a 1031 exchange. As a largely hands-off asset, mineral rights entitle you to the ownership of the natural resources found below the surface of the earth in a designated area.

As a mineral rights owner, oil and gas companies can lease your land to extract and sell valuable resources on the open market. In exchange, you will receive mineral royalty checks as outlined in your mineral rights lease agreement.

Conclusion

When it comes time to sell your software, you can be in for a large influx of cash if your product is worth it. Although it is tempting to go overboard with celebrations, a reinvestment of your capital with a 1031 exchange can not only save you money on the sale of software but also generate a future stream of income.

Foreign property is exciting to purchase, but can often be excruciating to sell. Depending on the country in which you’ve invested, you may be seeing a huge developmental gain or a staggering financial loss if the time has come to sell your foreign property.

While land and buildings in areas outside of the United States are subject to the laws of their native country, if you are a taxpayer in the US, then the sale of your foreign property will also accumulate hefty regulation and taxation on your income.

With this in mind, double taxation will quickly eat away at your chances of turning a profit on your international investment. To mitigate this, capital gains taxes are often deferred by way of a 1031 exchange, which requires former property owners to “trade” their sold property for a new, similar investment.

In this article, we will outline the steps necessary to 1031 exchange foreign property and eliminate capital gains taxes. With this, we will also showcase the strength of mineral rights and other profitable investments as the new properties chosen in a 1031 exchange of foreign property.

How to Sell Your Foreign Property

Before you can 1031 exchange a foreign property, you will first need to sell it. Selling is typically done through an intermediary unless the property is the seller’s personal residence, in which case it may be sold directly from the owner. Real estate practices, systems, and laws are different in every country around the world, so sellers must be aware of all of the regulations pertaining to the sale of their property.

Determining the Value of Your Foreign Property

Somewhat obviously, the value of your foreign property is going to be determined by a myriad of factors that will differ based on location. If you did not make any improvements on your property, then it will likely be sold at a similar value as to when it was purchased. If you are choosing to sell your foreign property by yourself, it is important to check the current market conditions in your area and adjust the price accordingly.

With the sale of foreign property, sellers must also consider the current exchange rate for local currencies back to USD. Everything on US taxes must be reported in US currency, so any gains on foreign property sales must be reported as so. Large differences in exchange rates may be responsible for net loss or gain on a property.

Taxes Paid on the Selling Foreign Property

Whenever a foreign property is sold by a US taxpayer, they will pay the IRS an amount of money that is commonly known as an “expat tax,” as the sum of a few different plausible taxations. In the event of a foreign property sale, the net loss or gain of the sale must be reported within Section D on that year’s income tax return. From there, losses cannot be written off, whereas gains are subject to taxation from federal, state, and capital gains taxes.

Gains up to $250,000 can actually be excluded from domestic taxation from the sale of foreign property abroad. Here, foreign properties that served as a taxpayer’s primary residence for at least 2 of the last 5 years are eligible for gains exclusions on property tax.

How to 1031 Exchange Foreign Property

If the net gain on your foreign property sale is large enough, then it will likely be subject to capital gains taxes in the sale’s calendar year. In the United States, the IRS has granted the unique opportunity to “trade” foreign properties in a 1031 exchange in order to defer capital gains taxes. Even if the taxation isn’t significant, utilizing a 1031 foreign property exchange in order to maximize property sales with new, cash-positive assets, will be well worth it.

Foreign Property Like-Kind Properties

Whenever a foreign property is 1031 exchanged, it must be “replaced” with a new, similar or “like-kind” property. While you may be selling land, buildings, or other high-ticket items overseas, personal property sales can be exchanged for many different kinds of assets in the United States. So long as you are selling a home, a building, or your foreign property, 1031 exchange can mitigate capital gains taxes if you purchase:

  • Another physical property (in the US or abroad)
  • Collectibles and artwork
  • Conservation easements
  • Mineral rights and royalties
  • And more

Timeline For a 1031 Foreign Property Exchange

Once the property is sold, taxpayers then have to identify one new property within 45 days if they would like to remain eligible for the 1031 foreign property exchange. This does not necessarily need to be the purchased property, and two other potential assets can be properly identified, regardless of their value. If no new properties are purchased within 180 days of the sale, then the foreign property seller is no longer eligible for a 1031 exchange.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

Using an Intermediary to 1031 Exchange Foreign Property

Due to the complexities of undergoing a 1031 foreign property exchange, most investors typically choose to use a specialty 1031 intermediary for the sale of property in relation to domestic taxation. In some cases, intermediaries are also able to help identify new properties that are best suited for the investor’s budget and goals.

What’s the Best 1031 Exchange For a Foreign Property?

Taxpayers are free to choose from a wide variety of new assets after the sale of a foreign property. But unlike in most countries around the world, United States property owners have the unique opportunity to 1031 exchange foreign property into mineral rights. With mineral rights, the subsurface of a property can then be elapsed or sold to oil and gas companies hoping to explore and extract minerals from the land. When these natural resources are sold, mineral rights owners are then entitled to mineral royalties, which come in the form of a monthly payment from the operation’s profits.

If your foreign property is not your primary residence then it will likely be necessary that capital gains taxes are paid. So long as you are not in the need of house hunting, mineral rights, and royalties service as the perfect reinvestment of wealth for the 1031 exchange of a foreign property. They are often hands-off investments with the potential for large streams of future royalty payments.

Owning your own vacation home can be a paradise for those fortunate enough to invest in a second home or apartment. Not only does a second home provide a great source of income, but it can also be enjoyed any time of the year when guests are not around.

Of course, if the right opportunity comes, selling a vacation property can be an attractive idea for a quick lump sum of cash. When weighed against the ongoing maintenance, marketing, and upkeep of a leased second home, a large sale is a great way to diversify your wealth once the allure of frequent getaways has worn off.

Unfortunately, with a large sum of cash being transferred to personal income, vacation home sales often lead to excessive taxation from the IRS. High valued vacation rentals are subject to capital gains taxes, which can be deferred in a simple 1031 exchange.

Vacation homes are one of the most commonly used assets in 1031 exchanges, as many wealthy investors have seen the opportunity to “trade up” for new property tax-free. In this article, we will outline the steps necessary to 1031 exchange second home or other vacation property and avoid capital gains tax and maximize profit.

How to Sell A Second Home

Before you can 1031 exchange vacation home, you will first need to sell it. If you’ve owned your second home for a while, chances are that you’ve had your fair share of offers from guests after their week in paradise. Whether or not you should take these handshake deals is up to you, know that the 1031 exchange is a much better way of selling your vacation property in the 21st century.

Determining the Value of A Vacation Home

With rapid acceleration in condensed areas, a second home can bring a tremendous gain in the right areas of the country. Conversely, natural disasters, poor upkeep, or depleting local economies unfortunately often land vacation property sellers with less than what they paid for originally.

If you plan to list your vacation home yourself or would like to get a ballpark idea of its value before speaking with a broker, one must consider the following factors to determine the value of a vacation home:

  • Size of home
  • Condition and upkeep
  • Current leasing price and rental history
  • Community amenities
  • Staffed or contracted services onsite

In popular vacation destinations, there are many similar vacation rentals within close proximity to one another. If you are selling in a dense area, the easiest way to get an idea of your second home’s value is to look at local listings for buildings and land that share similar characteristics with your vacation home.

Taxes Paid on the Selling Second Home

Unlike in the sale of a personal residence, vacation homes that can be considered a business or second home are subject to capital gains taxes in the event of a sale. Capital gains taxes can be as high as 20% on expense vacation homes, in addition to the federal, local, and sales taxes that are also applied to the bill of the sale. With every dollar adding up, many investors choose to defer capital gains taxes on sales through a 1031 second home exchange.

How to 1031 Exchange Vacation Home

In a 1031 exchange, vacation home sellers must purchase a new asset “in exchange” for their old property. If the new property is of equal or greater value, then taxpayers through the 1031 exchange have the opportunity to defer every dollar of capital gains taxes. In the same vein, lower-valued assets can be purchased for a partial omittance of capital gains taxes.

Vacation Home Like-Kind Properties

As alluded to above, vacation homes are some of the most commonly used assets in 1031 exchanges. Sales of second homes are subject to taxation, but capital gains taxes are completely avoided with the proper paperwork and the purchase of a new “like-kind” asset. In a 1031 exchange vacation home can be exchanged for many like-kind assets, including:

  • Apartment Buildings
  • Trailer Parks
  • Convenience Stores
  • Golf Courses
  • Farms
  • Water and Ditch Rights
  • Mineral Rights and Royalties
  • And more

Timeline For a 1031 Second Home Exchange

Once your second home is sold, you have exactly 180 days (or about six months) to purchase a new property for a valid 1031 exchange of the second home. If filed correctly, taxpayers will completely defer capital gains taxes in the year of which the exchange was completed. Additionally, it is important to note that one “reasonable” property must be identified within 45 days of a vacation home sale for the taxpayer to remain eligible for the 1031 exchange.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

Using an Intermediary to 1031 Exchange Second Home

For most, the process of filing governmental paperwork and meeting strict deadlines can be daunting in an already busy life. Because of this, many sellers will choose to work with an intermediary in order to 1031 exchange vacation home smoothly and make sure the reinvestment is maximized when identifying the new asset for the 1031 exchange.

What’s the Best 1031 Exchange For a Vacation Home?

Although taxpayers are free to 1031 exchange second homes for a wide variety of new properties, mineral rights offer a unique opportunity for investors looking to maximize their wealth. In the United States, mineral rights can be leased to oil and gas companies to explore, extract, and sell natural resources from the subsurface of a property. In doing so, mineral rights owners earn oil and gas royalties as a fixed percentage from the monthly operations.

Conclusion

After years and years of vacations, when it comes time to sell your vacation home, 1031 exchange is one of the best decisions that can be made. If you are seeking an income stream that is a bit more passive than maintaining a second home, mineral rights are one of the best new properties that can be purchased income tax-free in a 1031 exchange.

Precious metals are, well, precious. Gold, silver, and even historic coins are some of the oldest representations of wealth that currently holds value in the world today. While gold, silver, and coins come in all shapes and sizes, extensive collections or large individual pieces can warrant huge cash sales to the right buyer.

Knowing this, investors with large reserves of precious metals will likely encounter a huge capital gain once the collection is sold. Although this is certainly exciting, it often becomes a little less so once capital gains taxes are paid on the sale of gold, silver, or numismatic coins.

Thankfully, modern IRS codes allow for large private property sales to defer capital gains tax with a 1031 exchange. In a 1031 exchange, a new property is purchased with the proceeds of the sale, so that investors essentially “trade” their assets, rather than pay capital gains taxes.

In this quick guide, we will outline the steps to 1031 exchange gold, silver, or numismatic coins. With this, the reinvent potential is limitless, and we will showcase mineral rights and royalties as one of the best possible private property purchases.

How to Sell Your Gold, Silver, or Numismatic Coins

Thanks to its value and history, there is essentially an unlimited number of ways to sell precious metals in today’s open market. From online sales to the pawnshop down the street, nearly everyone knows that gold, silver, and coins can be a strong investment that will hold its value for potential resellers.

With this said, legitimate sales must be completed with proper paperwork if you are hoping to utilize a 1031 exchange. While this is somewhat obvious, it is important to remember that legal sales to legitimate sellers are going to be the best way to maximize the sale of gold, silver, or numismatic coins.

Determining the Value of Your Gold, Silver, or Numismatic Coins

Everyone knows gold, silver, and coins are valuable, but how valuable? While numismatic coins are generally valued far and beyond their original face value, first-time sellers may have a difficult time determining the approximate value of newly inherited or acquired precious metal products.

Gold, silver, and numismatic coins are generally valued by the following considerations:

  • Type of metal and its current market value
  • Percentage of precious metal within assets
  • Size, quantity, and weight of the collection
  • Current asset conditions
  • Number of previous owners
  • And more

While most gold, silver, and numismatic coin sales are to private investors and entities, precious metal sales also have the opportunity for a few unique market positions. Beyond individuals, companies, governments, and even museums may be interested in acquiring gold, silver, or numismatic coins.

Taxes Paid on the Selling Gold, Silver, and Numismatic Coins

In legitimate sales, the IRS classifies gold, silver, or numismatic coins to be “collectibles.” With this in mind, considerable taxes are paid whenever precious metals are sold. Although the rates are variable depending on your location, the following may be paid on the sale of gold, silver, or numismatic coins:

  • Capital Gains Taxes
  • Sales Taxes
  • Local Taxes
  • Federal Income Taxes
  • And More

When considering a collectible, taxpayers do not get the benefit of long-term capital gains tax rates. Instead, the sale of gold, silver, or numismatic coins is likely to coincide with a capital gains tax rate of up to 28% of the total bill of sale. Knowing this, the difference of capital gains taxes with a 1031 exchange is becoming increasingly common among both new and experienced investors.

1031 Exchange Gold, Silver & Numismatic Coins

1031 exchange gold, silver, or numismatic coins can be used to avoid every penny of capital gains taxed if taxpayers choose to invest the sale into a new asset of equal or greater value. While partial fees can be deferred with a property of lesser value, this is less common than investments that allow taxpayers to stretch their capital as much as possible.

Gold, Silver & Numismatic Coins Like-Kind Properties

The sale of gold, silver, or numismatic coins presents the opportunity to reinvest in a large number of different personal properties with a 1031 exchange. While the true definition of “like-kind” properties is quite loose, the IRS allows the following to be exchanged for gold, silver, and numismatic coins:

  • Mineral rights and royalties
  • Cars and other collectibles
  • Homes and apartments
  • Office buildings
  • Convenience stores
  • Trailer parks
  • And more

Timeline to 1031 Exchange Gold, Silver & Numismatic Coins

After the asset is sold, taxpayers have exactly 180 days to replace gold, silver, or numismatic coins in a legal 1031 exchange. While this offers a grace period of essentially six months, at least one new property must be identified within 45 days of the sale.

Here, deadlines must be met alongside the necessary paperwork to legitimize a 1031 exchange. With this, many investors choose to work with a 1031 exchange intermediary to ensure the entire process is as smooth as possible. Beyond this, industry-specific experts are also available to assist in property identification to maximize your investment.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

What to 1031 Exchange Gold, Silver & Numismatic Coins For

While private property owners can choose to invest in virtually anything with a 1031 exchange, mineral rights present a unique opportunity for taxpayers within the United States. With mineral rights, also known as subsurface rights, the property can be leased to oil and gas companies to explore, extract, and sell natural resources such as oil, gas, coal, or more. In doing so, mineral rights owners can receive monthly mineral royalty payments in compensation for their participation.

Conclusion

In conclusion, 1031 exchanges are one of the best ways to maximize the sale of gold, silver, or numismatic coins. With each dollar of capital gains taxes saved, reinvestment can go further into a new private property. Today, few investments are available that are quite like mineral rights, which can serve to become a profitable income stream or high value resell in a world of growing energy demand.

Not everyone has the privilege of their own private aircraft. Whether it be a propeller plane, private jet, or fleet of helicopters, aircraft possession is usually only reserved for the immensely wealthy or a handful of diehard aviation enthusiasts.

With that in mind, when it comes time to sell an aircraft, a lot of capital is going to be thrown around. No matter the age or operating function, planes and helicopters are generally sold at high ticket prices to wealthy bidders.

Here, experienced investors know of a little trick called a 1031 exchange. In this IRS designated procedure, a taxpayer can evade capital gains taxes on the sale of a large asset by reinvesting the capital in another purchase. In doing so, 1031 exchanges can be used to “trade” aircraft for other private properties.

In this article, we will outline the steps it takes to 1031 exchange aircraft. In doing so, we will illustrate mineral rights and royalties as a great property option for investors looking to maximize the sale of an aircraft.

How to Sell an Aircraft

Even in the third decade of the 21st century, we are still seemingly far away from the cartoon future of flying cars everywhere, owned by everyone, like in The Jetsons. With a limited market, this proves to make private aircrafts somewhat difficult to sell. Here, we recommend working with a broker to help facilitate the sale. Once the deed is done, any registration or FCC licenses in the previous owner’s name must be removed.

Determining the Value of Your Aircraft

Most private aircraft actually retain their value quite well. So long as it was kept in good operating condition and was purchased from a reputable seller, the price you paid for your aircraft may actually be quite similar to the price that you sell your aircraft years later. FOr this reason, jets, planes, and helicopters are a popular business asset for reserving large amounts of money within the organization’s portfolio.

The value of an aircraft is determined by the following attributes:

  • Type of aircraft
  • Make and Model
  • Size
  • Age
  • Condition
  • Fuel efficiency
  • Added or removed features
  • Branded or not branded exterior
  • Navigation features
  • And more

Of course, the true value of any aircraft is only the amount that someone is willing to pay for it. While you may own your aircraft privately or as a part of a company’s asset portfolio, an aircraft can then be sold to individuals or businesses large and small. With that said, planes and helicopters with significant mileage are usually deemed unfit for commercial use by many private businesses and government regulations.

Taxes Paid on the Selling Aircraft

As we mentioned earlier, planes, helicopters, and jets sell for an awful lot of money. Whether it be a one or two comma deal, former aircraft owners can expect a bulge influx in cash if the time comes when they decide to sell. Unfortunately, with every dollar earned, another portion of that dollar may be taxed by local, state, and federal governments.

When selling an aircraft, you can expect to pay:

  • Personal Property Tax and Registration Fees
  • Depreciation
  • Passive Activity Losses
  • Federal Income Taxes
  • Capital Gains Taxes
  • Sales Taxes
  • Local Taxes
  • And More

When all is said and done, aircraft sales can come with nearly 40% of the capital gone to taxes. Naturally, one of the best and most common ways to reduce this amount from totaling beyond its worth is to 1031 exchange aircraft.

1031 Exchange Aircrafts

In a 1031 exchange, aircrafts sold and replaced with an asset of equal or greater value will result in the complete deterrence of capital gains taxes that would have been otherwise paid. Whereas it is possible to only partially eliminate some of the capital gains taxes paid on the sale of an aircraft, most investors choose to “trade up” for another aspect that is either functional or financially favorable.

Aircraft Like Kind Properties

In order for a 1031 aircraft exchange to be valid, an aircraft must be replaced with a “like-kind” property. The IRS is pretty open to what can be considered similar, largely viewing most property assets as in the same vein. With that being said, helicopters, planes, and jets can be used in a 1031 exchange to purchase:

  • Homes
  • Apartments
  • Convenience Stores
  • Farms
  • Water and Ditch RIghts
  • Mineral Rights and Royalties
  • And more

1031 Exchange Aircraft – Timeline

Although it may take some time to find the right buyer, as soon as the sale of an aircraft is officially complete, then the taxpayers’ eligibility for a 1031 aircraft exchange begins immediately. From here, at least one potential property must be identified for purchase within 45 days. Following this, a new property must be purchased within 180 days (or roughly half of a year) in order to avoid paying capital gains taxes on the sale of their aircraft.

For additional requirements, please see our 1031 Exchange Rules and Requirements Page.

Using an Intermediary to 1031 Exchange Aircraft

Obviously, deadlines must be met and paperwork must be filed to complete a successful 1031 aircraft exchange. While both time-consuming and laborious with extreme attention to detail required, it is recommended that investors work with a 1031 exchange intermediary to maximize the sale of an aircraft.

What to 1031 Exchange Aircraft For

In the United States of America, private landowners can buy and sell their properties subsurface in the form of mineral rights. With mineral rights, the land can then be leased to oil and gas companies looking to find, extract, and sell the natural resource found beneath the earth’s surface. Once it’s sold, mineral rights owners will then receive mineral royalty payments as a fixed percentage of the operation’s income.

Conclusion

When it comes time to 1031 exchange aircraft, purchasing mineral rights is one of the best portfolio adjustments that is exclusive to a few select countries. In doing so, mineral rights can generate highly profitable streams of income through monthly royalty payments or another large lump sum in a future sale.