Understand the tax implications of mineral royalties

mineral royaltiesIn order to offset the costs of owning land, many land owners are considering selling their mineral rights. This can be a solid solution as a one time sale where you can get a sum of money for selling a tract of your land. If you are looking for a more sustainable alternative, you may consider leasing your mineral rights instead. At least for a while, you may can generate some reasonable revenue from your land. You may be able to receive royalty checks each month for up to five years or more if your land if rich with precious minerals. Many land owners have found this solution to be a game changer for both their business as well as their families.

It would be nice to think that leasing your mineral rights could be an effective side gig. However, with any side business, there are tax implications. Because you are generating cash from leasing mineral rights, you are creating revenue. All incoming revenue is considered income to the IRS. Therefore, your mineral royalties will be taxed as income. To avoid being overtaxed for your royalties, you can set up your side gig as a true business entity. By setting up a business entity, you are offsetting you liability. This will help to protect your personal assets and save you money on your taxes.

In order to know exactly what tax implications you will experience, you will need to know how much of these minerals are being extracted. This is because the taxes are calculated based on this amount. If you receive royalties from your mineral rights, you can expect to be taxed at three levels. You will be taxed at the county level with an Ad Valorem tax. This tax is variable and is based on the value of the minerals extracted which will actually fluctuate based on supply and demand.

At the state level, you may also expect to receive a Severance tax. This type of tax is specifically related to the extraction of oil and gas. The money collected from this tax is based on the amount of oil or gas extracted and is used to offset the cost of protecting the environment from the drilling. When drilling natural resources from land, the surrounding environment will be affected. Therefore, extra land is accounted for to provide an extra barrier between the drill site and the protected land.

Where those two imposed taxes are based on the volume of the extraction, there are also state and federal taxes applied to the income that you receive from your mineral royalties. In other words, the amount of money you receive from leasing your mineral rights, will directly affect the amount of taxes you will be required to pay. Make sure to set aside an adequate amount to count for these tax implications. Otherwise, you may find that leasing your mineral rights wasn’t such a great idea after all when you are hit with a huge tax bill at the end of the year.


Gas Royalties are Going to Make You Rich

The gas royalties do not require any type of job duties will obviously vary from one person to another. This is just to go to say that not everyone in the company will be doing all of the exact same job duties. You and no one else would actually be surprised by this either. The reason would actually be because there are going to be a lot of jobs that are made available within these types companies.

There will be times when the individuals who are interested in some of the services that the people who are from the family owned mineral or even the best of the best types of the gas rights company are going to be the most helpful. You will want to make sure that you are being able to provide them with the most accurate information about the requests that you may be in the need of wanting to give out to someone.

This type of a situation will actually end up being of help the individuals who are with the type of individual who will be able to actually benefit from the gas rights that they are able to hold. As well as each and every single thing that they are going to be able to better provide you with the information that is actually relative to your current situation in your life.

This could mean that you will begin to get really close with some of the more common people who you will actually have some of the more day to day common duties with. This is something that a lot of people who are working with the professional gas rights and all of the other types of royalty companies do not actually realize. This can sometimes be the major challenge about this but at be ale time there are going to be a lot of actually very helpful benefits as well as some good pieces of information that you will more than likely find to be actually very helpful for you to have an idea about 

The thing here may be the case that this is that these are actually the exact same individuals who are going to be able to have a good use about the specific details about the benefits of a family owned royalty company. These are the types of gas rights companies that actually will be able to lead you to be able to find out which types of products you will want to be able to gain your family owned gas rights company money from.

They will be a good assistance tool for a lot of people. Even if you are not really interested in getting paid through any of the more common gas royalty systems there will be another thing that you could actually benefit from. The very moment when you will actually want to be able to get a little bit familiar with there will be great successes that you will find which will actually come out of that.


  1. A small operation may be the way to go when it comes to mineral extraction today. There are about five major extraction companies that are currently operating in the country right now. The five big mineral extraction agencies are able to handle a large number of clients at once because they have a huge fleet of mineral extraction machinery and crews within their companies. While the major extraction crews may be good in some aspects of royalty mining, there has been a well marked decline in the number of small clients who use those types of services currently. Today people prefer to use smaller, family run extraction agencies when it comes time to operate on their land, and that is because the smaller agencies have a better reputation of customer-company relationships. Popular family run operations, such as americanminerals.com, receive thousands of new clients each year, many of which have given up on working with large firms doe to the poor treatment they received. Even the major mineral extraction magazines have started to report the phenomenon of family rub extraction companies taking over the majority of privately owned extraction jobs right now. If the trend continues on its current path, private properties making deals with large extraction companies may become obsolete in the near future. Looking for a family owned mineral company is a great place to start when people are in need of mineral extraction on their property.
  2. People should seek a royalty company that has the tools to get the job done right. It is important to keep in the mind the fact that, while a company may offer their client a good deal on their mineral extraction cut, if the company doesn’t have the right tools and manpower to get the minerals up out of the ground, there will never be any money at all. People should always ask the extraction company they are considering using what sort of tools they work with, and if they have their own machinery, or if the machinery is rented out from a larger company. There are some mineral extraction agencies out there today that have no equipment of their own, and only rent equipment when they are in need. A mineral extraction team which doesn’t have its own machinery and tools is really only a sub-contractor. A mineral royalty company must be truly independent form the competition in order to provide their clients with an excellent extraction deal.
  3. Lastly, a good contract offer is one of the most important aspects of any deal with a mineral royalty company. There are all sorts of deals offered when it comes to how a mineral extraction company pays its client for the right to extract on their property, and most of them can be good deals if the stipulations are correct. The most common offer that is being made today is a straight rental offer in which the extraction companies offer monthly renting while they are working. The monthly renting of property where extraction is being done is a simple and straightforward deal most of the time. No matter what the final deal may be, always be sure and get it checked over by a lawyer before any paper work is signed.

Trusting A Company That Has Proven Themselves

A lot of money can be made in the oil and gas markets. Unfortunately, there are businesses out there that have sullied the good name of oil and gas, and made it harder to work with any of these companies. Especially if you are a simple property owner and all you are interested in is selling wither your mineral rights, or royalty rights. Your concern is making money off of the land you already own, but are wary that you will get taken advantage of because of your lack of experience in this market. Fortunately, there is a company dedicated to cleaning up the bad name that is associated with oil and gas companies, especially when it comes to working with individuals. American Minerals is a family owned business. Their business has recently been created, but that does not mean they do not have the experience needed to help you make the best decision for your land and mineral or royalty rights. American Minerals is dedicated to building lasting relationships. They hope to do this by having the best customer satisfaction, offering the best advice, and extending their resources and connections on to you. With all these things together you are sure to get the best possible arrangement and make the most money off of your land.

One big advantage of working with a family owned mineral company is the relationships you build with the people you will work with. They are personable, and down to earth. You will get to know them, and be able relate with them as you work together. You will not have to worry about jumping through corporate hoops in order to satisfy the big dogsAmerican Minerals at the top of the food chain. This also means that no arrangement is too small. They will be dedicated to making each agreement successful because it means building a relationship, and not so much making money. The experts at American Minerals are sure to impart their wisdom and assist in making the introductions to the companies you want to work with. You will feel like part of the family as you work with their team.

Once they are able to get a good idea of you, your property, and your individual needs the experts at American Minerals will assist you in choosing to either sell your mineral rights, or a portion of your royalty rights. Both options have several benefits that may interest you, or may contain some negative points that may make you lean toward the other option. Selling mineral rights is generally quick, easy, and results in one large payout, while also disconnects you from the process of producing those resources on your land. Alternatively, selling royalties can keep you in the decision making process, pay out more in the long term, and allow you to maintain possession of the mineral rights. This option also takes more time before you see money in your hands. American Minerals can assist with either of these options as they are a mineral royalty company. Whichever direction you choose to explore, you can be assured that American minerals will be there to assist you in making the best and most profitable decisions.