The information provided on this page is for general informational purposes only and does not constitute legal, financial, or investment advice. Oil and gas laws, mineral rights regulations, and royalty structures vary significantly by state and jurisdiction. While we strive to provide accurate and up-to-date information, no guarantee is made to that effect, and laws may have changed since publication.
You should consult with a licensed attorney specializing in oil and gas law in your jurisdiction, a qualified financial advisor, or other appropriate professionals before making any decisions based on this material. Neither the author nor the publisher assumes any liability for actions taken in reliance upon the information contained herein.
Understanding mineral rights is easy. Understanding the taxes associated with mineral rights is a bit more complicated. The short answer is Yes. If you own producing mineral rights, then you must pay property taxes on them. This is because, like surface rights, owning mineral rights means that you own real property, even if it is just a fraction of an estate.
You cannot go and “visit” your mineral rights property? Since it is below the surface of the Earth, it still exists, and therefore is taxed as property. If you only own a fraction of the estate, which is very common, then you will only have to pay a fraction of the property tax as well. The amount of taxes is based on the volume or the value of the minerals produced.
It is very important to note that in most states, this property mineral rights tax is only enforced when the property is in production. When in production, the tax is only billed and collected once per year. If you own non-producing mineral rights, such as the land below your suburban residence, there is a good chance that your annual property tax will not include an amount associated with your mineral rights.
Can I be exempt from taxes on my Mineral Interests?
Yes. Standard property tax code exempts mineral rights owners from paying taxes on very small amounts. The current threshold allows mineral interests valued below $500 to be exempt from taxation.
How do multiple property taxes work with an oil or gas lease?
If you own an oil or gas lease, chances are there may be multiple wells on the property. Each well is considered to be a different piece of property and you will, therefore, have separate mineral rights taxes for each one.
If you have further questions related to the topic, feel free to reach out to us here.
