Four Reasons You Should Sell Mineral Rights On Your Property

Have you been approached by a company interested in purchasing the mineral rights on your property? You might be wondering if there's a "catch." If you're not using the entirety of your property right now, selling mineral rights is usually a very sound economic decision. Here are a few of the primary advantages.

1. You Get Money Right Away

If you actually want to drill for oil and gas on your property, it's going to take a long time -- and there's no guarantee that you'll recover anything worthwhile. When you sell mineral rights on your land, you get money right away. You don't need to wait for a stipend, as you would have to with a mineral lease, and you won't need to recover any of the involved materials yourself.

2. You Can Hedge Your Bets

Mineral rights are usually sold on speculation. Essentially, a company predicts that there are minerals on your land, and would like to buy the rights to minerals that may or may not exist and may or may not be plentiful. Whether or not these minerals are recovered doesn't matter to you -- you get paid the same amount either way. If you're not certain that your land is mineral rich, it's the perfect way to hedge your bets rather than going all in yourself.

3. You Save On Taxes

Selling mineral rights is usually classified as a long term capital gain rather than direct income, whereas actually reclaiming and selling minerals or leasing your land would be considered income. Capital gains are taxed at a lower rate than income is, so you will safe on taxes substantially.

4. You Diversify Your Assets

Selling mineral rights on your property can be seen as an investment in the oil and gas industry. If you already have a fairly conservative portfolio or are trying to develop your assets further, selling mineral rights will give you a foothold in an industry that is booming. If oil and gas is starting to grow in your area, you can benefit from these increased prices through your mineral rights sale.

Sound good? Don't call the company back just yet. You should always consult with a real estate agent, brokerage or legal aide before you sign the paperwork. A real estate professional will be able to tell you whether the offer for your property's mineral rights is the going rate, or whether they believe you can negotiate further.