WHY MONETIZE NOW?Monetizing your mineral interest can be a quick and easy way to FREE YOURSELF FROM DEBT.
Monetizing your mineral interest can give you the cash you need to BUY OR BUILD YOUR DREAM HOME.
Give yourself, your children or grandchildren the COLLEGE EDUCATION they need to succeed in life and relieve them of the stress of student loans.
Monetizing your mineral interest can provide you with the funds to OPEN A SMALL BUSINESS of your very own.
Monetizing your mineral interest can quickly give you the means to UPGRADE YOUR VEHICLE, equipment or recreational vehicle.
CAN MONETIZING MY MINERAL INTERESTS HELP ME DIVERSIFY MY INVESTMENTS/HOLDINGS?YES. Monetizing a portion or all of your mineral interest allows you to diversify your investments and invest your cash in a more stable asset. You can divest from a depleting asset and invest in opportunities that can consistently increase in value over time.
HOW CAN I REDUCE MY RISK AND PROTECT MY FINANCIAL FUTURE?
The oil and gas industry is a volatile economic sector with constant fluctuations in well production, drilling schedules, and commodity prices driven by regional and global crisis, as well as other uncontrollable variables.
Many mineral owners choose to monetize a portion of their mineral interest to hedge against loss. When an owner monetizes 50% of their mineral interest they reduce their risk of loss by receiving capital today. The tax rate is often lower than receiving the same amount of money in royalties. This capital can be reinvested allowing you to benefit from both a new investment and the remaining mineral interest.
ARE THERE TAX BENEFITS TO MONETIZATION?
Absolutely! Royalty revenue is treated as ordinary income and taxed at your individual income tax rate based on the bracket you are in. If you have owned your mineral interest for a year or more, monetizing the interest is treated as long-term capital gains and potentially taxed at a substantially lower rate than mineral royalty income. You also may be able to apply a cost basis to a portion of the monetization revenue that further reduces your taxable income.
If you have any questions about the above, we can consult with you and your accountant since everyone's tax situation and circumstances may vary.
WHAT IS A 1031 TAX FREE EXCHANGE?A 1031 "Tax Free" Exchange is possible with mineral interest and can result in paying no federal income taxes at all. In the event you are divesting a mineral interest with a low basis it may be advisable to explore a 1031 Exchange. Mineral Interest are classified as real estate and the proceeds from sales may be reinvested in land, income producing property, or other oil and gas assets without payment of federal income taxes. We can introduce you to the leading qualified intermediaries in the exchange industry who can help facilitate a 1031 exchange should you elect to do so.