mineral rights taxes

Do You Have to Pay Property Tax on Mineral Rights?

Mineral Rights Taxes: Do You Have to Pay Property Tax?

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.

So whereas you cannot go and “visit” your mineral rights property, as 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 mineral rights 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 taxes 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.  If this is true, each well is considered to be a different piece of property and you will, therefore, have a separate mineral rights taxes for each one.

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