Understanding
Minerals & Royalties

For individuals already enjoying retirement, royalty ownership is often considered “mailbox money” designed to help augment their monthly income potential. Royalty payments are made for as long as an asset produces, which can be upwards of forty years or more in some fields.

For those planning for retirement, income-generating royalties can help significantly amplify retirement savings when used inside an Individual Retirement Account (IRA) or other tax-deferred savings vehicle. By delivering a monthly cash infusion, royalty payments into your IRA provide the means to strategically invest in new opportunities or to take advantage of dollar-cost averaging in existing investments – all tax-deferred under your retirement plan.

Royalty owners enjoy a depletion allowance which waives income taxes on the first 15% of royalty income each year.

As deeded real property, oil and gas mineral and royalty interests are considered “like-kind” replacement property for the purposes of a 1031 exchange. This means that investors have the option of investing all or a portion of the proceeds from a commercial real estate transaction into oil and gas minerals – all while deferring capital gains taxes.

Mineral/royalty ownership in unconventional shale plays provides exposure to upside potential. As continued development “proves up” additional reserves, the market value of royalty interests has the potential to increase, resulting in a better overall ROI.

The cash from a Sale can be used to pay off a debt, Finance college, save for your retirement, invest, etc. Whatever the current situation calls for, you will have the freedom to do so from the proceeds of the sale. Due to market volatility, Oil and Gas royalty value can fluctuate. If you are interested in gauging the market value of your royalties and/or selling, please contact Heritage Land & Minerals and a representative will reach out to you.