Everything You Need To Know About Inherited Mineral Rights

If you have recently inherited mineral rights, you may be wondering what to do next. This can be a confusing process, but don’t worry – here, you will get the help you need.

This blog post will outline everything you need to know about inheriting mineral rights. Here you will have information about how to claim them, how they transfer from the owner, and their taxability. There will also be tips on determining the cost basis of inherited land.


What’s Inherited Mineral Rights?

Mineral rights are the right to extract minerals from a piece of land. When you inherit mineral rights, you become the owner of those rights. This can be a valuable asset, as it gives you the right to explore and drill for oil or gas on the property.


How to Claim Inherited Mineral Rights

The first step in claiming your inherited mineral rights is to find the deed or title to the property. This document will outline who owns the mineral rights and how you can transfer them.

Once you have the deed or title, you must contact the appropriate state agency to make a claim. Every state has its process for claiming mineral rights, so be sure to do your research.


How Do Inherited Mineral Rights Transfer?

Mineral rights can be transferred in a few different ways. The most common way is through a will or estate plan. When the mineral rights owner dies, their heirs will become the new owners.

Another way to transfer mineral rights is through a lease. If the mineral rights are leased to a third party, the new owner will need approval from the current lessee to claim them.


Taxability of Inherited Mineral Rights

The taxability of inherited mineral rights depends on how they are transferred. If they are transferred through a will or estate plan, they are considered a part of the estate and are subject to taxation.

If they are transferred through a lease, the value of the mineral rights may be taxable. However, this will depend on the terms of the lease agreement.


Determining Cost Basis for Inherited Land

The cost basis for inherited mineral rights is “fair value.” It’s simply the book value of what you receive on the day you acquire it. 

If you sell your rights afterward, you’ll have to pay capital gains tax on the difference between your cost basis and the sale price. It’s a good idea to have an independent valuer verify the calculations on the stated cost basis or fair value of your inherited mineral rights. 

Many variables can go into calculating this number. Some of them are:

  • The price of oil or gas fluctuates. The value of land rises and falls over time. You’ll want the cost basis to be as accurate as possible.
  • If it’s set too low, you’ll pay more in capital gains taxes when you sell.
  • If the price is too high, you won’t make as much money on a sale or lose money.


Sell Your Inherited Mineral Rights To Blue Flame Minerals

Selling mineral rights is no longer complicated with 
Blue Flame Minerals. As a mineral rights acquisition company, we make the process easy for you. We have a wide network of industry professionals who can help with every process, from claiming to drilling.

We understand that every situation is unique, and we are here to help you get the most out of your mineral rights. Get in touch with us today.


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