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QUESTION DO THE OWNERS OF MINERAL RIGHTS PAY TAXES ON THAT PROPERTY?

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Travel4Life 2
Denise C 2
~grandma again~ 1
randyjet 5
planemom 1
lLackCreativity 1
fabulous 1
samigale 1
path 1
BaylorMom 1
La_Guerita 1
♥Connie♥ 5

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randyjet --- 5 years ago -

This is for those who may know, Do the owners of mineral rights pay property taxes on those rights? Do they pay even though the mineral rights are NOT being exploited? I think that they DO pay taxes on them if there is oil for example being taken out. But I was wondering if they pay taxes on those minerals when they are not being taken out? And if they are NOT paying taxes, why are they exempt from them? We still have to pay taxes on our land and homes, and that fluctuates with times and uses. I would like to buy the mineral rights under my land, but there is no incentive to sell from what I can see on the part of the current owners of those rights. 

planemom --- 5 years ago -

That's a good question. I don't know. 

~grandma again~ --- 5 years ago -

i believe the property taxes are paid on the property and the taxes are paid on the oil as it is taken out and sold. my grandfather had some property in West Texas and that is the way they did it back then anyway. 

Denise C --- 5 years ago -

I have mineral rights on some property and yes, property taxes are paid each year. However, they are minimal. A 1099 is also sent out each year so you have to file the amount on your income tax as well. 

randyjet --- 5 years ago -

A 1099 is also sent out each year so you have to file the amount on your income tax as well. Well that only applies if you are getting paid some money from those rights. If you get nothing from those rights, do you pay taxes on them? 

path --- 5 years ago -

I believe you only pay taxes if you own the property and the rights. My mom owns mineral rights on land in OK that she inherited but does not pay taxes....only taxes on the product that is mined/produced. You do not pay taxes on mineral rights only as long as the land is not producing....hope this makes sense. You pay taxes if you own the property 

♥Connie♥ --- 5 years ago -

If you own the property and the mineral rights you pay the property taxes. If you have sold the property but retained the mineral rights and there is no production you pay nothing. If you retained the mineral rights and there is production of oil or natural gas then at the end of the year - whomever leased the mineral rights from you will send you a 1099 and you include that with your taxes - depending on your itemized deductions - you may or may not owe anything. A company like Shell or Mobil among thousands of others out there will have some data from previous exploration either in the area or in the nearby areas and will want to explore. They will hire a seismigraph company to do the exploration. You will be contacted and sign a permit (contract) prior to any the exploration process, which is called seismology (this is where either vibriseis trucks come and drop a pad on the earth and send out a sonic boom that shakes the earth or holes are literally drilled into the earth and dynamite is placed inside and exploded). You will be paid for this seismic exploration a fee determined between yourself and the permit agent for the seismic company. If the seismic reading shows something of interest, then usually depending on what is seen in the seismic report drilling exploration will begind with drilling rigs. If the rig hits payload, oil or gas, then a mineral lease will be needed between you and the company that will extract the product. You will be presented with a second contract in which the terms of your lease will be decided and the amount you will earn for the oil or gas that is removed - this is your royalties. Royalties are the only monies you will be sent a 1099 form for - the seismic exploration access fees usually are not taxed. 

♥Connie♥ --- 5 years ago -

Oh - sorry forgot to mention - that I used to be a permit agent for a seismic exploration company - Halliburton Geophysical. That was in my early years with Halliburton but the process hasn't changed. 

randyjet --- 5 years ago -

You pay taxes if you own the property Well actually I don't own the whole property, and not only that, but I have very little rights if oil is found on the property. The mineral rights owners have preference over MY rights as the landowner. That is a pretty lopsided arrangement. I pay ALL the taxes, and the owner of the mineral rights pays nothing, and then gets to trample over my surface property to get at their wealth. It is high time to change this and make mineral rights owners pay at least HALF of the property taxes assessed. Then they can also pay taxes on the amount of oil or whatever they extract. Texas is so biased in favor the wealthy that it is absurd. 

Travel4Life --- 5 years ago -

mineral rights are not real property so therefore no real property taxes are due; however, real property taxes are due in regards to the ownership of the land/real property. So whoever owns the land pays the taxes. 

Denise C --- 5 years ago -

I pay ALL the taxes, and the owner of the mineral rights pays nothing, and then gets to trample over my surface property to get at their wealth. Have to disagree here :). Many many mineral rights right here in the Atascocita area but they are owned by someone else. There is no digging etc. in my backyard. I don't feel the person who owns the mineral rights should have to pay my property tax on surface land and my house. The mineral rights I have owned on another property since 1991 still produce. However, there is no drilling on the property so why should it matter that I get a small check from a company that has minerals passing deep down under the house of this property? The mineral rights on this particular thousands of acres are divided among all the owners so the value is also shared among us. The only well is on some vacant land. I think that kinda makes sense :) 

Travel4Life --- 5 years ago -

Yes but Denise there are plenty of occasions where the mineral rights are severed and the real property owner doesn't protect himself, allowing the mineral rights owner to drill all over the property -- of course I am talking about areas that don't have a "no drill ordinance." It is unfortunate that many people don't understand and so oil companies will take advantage and drill all over and disturb the real property with no obligation to pay real property taxes...so I gotta agree with randyjet in some cases. 

randyjet --- 5 years ago -

There is no digging etc. in my backyard. Since most land that we all have our houses on do NOT have mineral rights, the owners of those rights CAN come and dig in YOUR backyard, and you have no legal recourse. In short, your rights as a land owner are LESS than that of the minerals rights owner. So THAT is why the property tax should be split evenly. Either that or make the rights of the landowner supreme to that of the mineral rights owner and that in order to get the minerals, the property owner has to grant permission to be on the land. In my case, I own a fair amount of land on which have my house on, yet I CAN be forced to allow a mining company to come onto my land and take whatever minerals are there. I would like to buy those mineral rights simply to make sure that I don't have to put up with such crap. Yet there is NO incentive on the part of the mineral rights owner to sell at a reasonable price. They can simply hang on to the rights forever, without having to pay anything while I pay all the taxes. 

samigale --- 5 years ago -

If you own the property and the mineral rights you pay the property taxes. If you have sold the property but retained the mineral rights and there is no production you pay nothing. That is absolutely correct!! 

♥Connie♥ --- 5 years ago -

Since most land that we all have our houses on do NOT have mineral rights, the owners of those rights CAN come and dig in YOUR backyard, and you have no legal recourse. In short, your rights as a land owner are LESS than that of the minerals rights owner. So THAT is why the property tax should be split evenly. Okay - this is not correct. Lets say I sell you a piece of property but I retain the mineral rights. Other than drawing royalties on any product extracted from the core of that land - I could not drill on YOUR land or give anyone else permission to do so. If someone is telling you they have rights to do anything to or on your land because they own the mineral rights - they are trying to pull a fast one. Also -generally speaking in situations like neighborhoods and densely populated areas - vibraseis trucks are used for exploration and in case of no drill ordinances - a horizontal drill is performed - meaning they start drilling in an area outside the no-drill zone and drill horizontally to the pocket. 

♥Connie♥ --- 5 years ago -

What you are entitled to - if you choose to allow exploration on or across your property is the permitting fees I mentioned earlier. Their are differnt kinds of seismic exploration but the most common variance today is what is caled 3-D exploration and basically the company is after information at the core of a boxed area. They shoot 4 lines that form a box. Let's say your property is in that box or in one of those lines. Well, if you're a shrewd haggler and and educate yourself on the subject - then you can actually make a vary large some of money just to allow the seismic crew to lay cable across your proerty. No drilling or anything else. But - you aren't getting ripped onthe mineral rights thing versus taxes. As theland owner you have sole rightd to what is and isn't allowed on your property. No oil company can say otherwise. If the situation arises - there ae attorneys that specialize in this very subject matter. 

lLackCreativity --- 5 years ago -

Someone came out to our house last year about looking for natural gas and oil. They apparently worked for the company that owns our mineral rights. The man was quite happy to answer my questions. He said that they could not drill ON my property, but could go under it. When I expressed concern about that too, he assured me that IF they damaged my property while going after oil/gas or even exploring...they were responsible for that damage. He also told me that they did NOT have to have my permission to explore because they would be doing it from a remote location via underground something or another. But the company who was doing it felt it was best to let the land owners know what the mineral right owners were doing. 

BaylorMom --- 5 years ago -

Since most land that we all have our houses on do NOT have mineral rights, the owners of those rights CAN come and dig in YOUR backyard, and you have no legal recourse. In short, your rights as a land owner are LESS than that of the minerals rights owner. So THAT is why the property tax should be split evenly. Where did you get your source of info on this. Seems like the others which have had experience says something different. Just was wondering. 

♥Connie♥ --- 5 years ago -

In this area most exploration and drilling is done that way becasue of the population and the no drill ordinances. Also, please keep in mind tht pockets of crude and natural gas at the core can literally span hundreds of miles - although there aren't any that big around here - there are claims that there are some that big off the Gulf Shelf. In our case, several years ago, a permit agent came along and wantd to do seismic exploration across our property. We came to an agreement (after our stipulations - to prtoect our property were added to the contract) and they cut us a check. When that exploration turned up natural gas - the same agent came back with a contract to drill. Even though I am versed and pretty knowledgable on the subject due to my employment history - we still took the contract to an attorney. We had the contract modified - to protect our assets and signed off on it. They drilled the McWhorter Gas Well about 3/4 mile from our house but the pocket that the well hit runs under our property so YES - we get a royalty check monthly because we also own our mineral rights. Now - why would we sell our mineral rights if we sold our house and property? That would just be stupid on our part - that's why most people retain their mineral rights and they are literally passed down through families via inheritances for generations. Because they are valuable. I actually inherited mineral rights in east Texas and South Texas on properties that are no longer owned by my families but I don't intend to ever sell them. It's kind of like owning a bond that might pay off big one day. Still I can't go to either of those properties and force the current land owners to do anything they dont want to do with their land. 

fabulous --- 5 years ago -

Everyone in our neighborhood owns the rights to their land. An exploration company came out to drill for natural gas a few months ago...they're still looking. At one point, I think we had a pump in the back that was pretty large, and I am not sure, but would assume it is still there. Fits in nicely with the rest of the trees, lol. editing my post: that sounded sarcastic, but it is 100% serious. 

randyjet --- 5 years ago -

From what I have read on Texas law on the net, the mineral rights owners CAN come on your land and use it to extract the minerals. There are some limits such as how close to a building things can be, but that is about it. I would like to know what some lawyers might say about this. 

La_Guerita --- 5 years ago -

If you own the property and the mineral rights you pay the property taxes. If you have sold the property but retained the mineral rights and there is no production you pay nothing.  

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