1031 exchange trailer park

1031 Exchange Trailer Parks [Ultimate Guide]

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If you own a trailer park, it can be difficult to part ways with your property. After all, having a lot of tenants in a trailer park can lead to a nice monthly income stream. Speaking of unreliable rent payments, frequent upkeep, and neighborhood issues? How about completely unrelated circumstances? These may have you thinking that perhaps there are better ways to invest your money. Introducing 1031 Exchange trailer parks opportunities.

Well, guess what, mineral rights and royalties are another great way to earn a monthly income. You will never have to knock on a trailer door again (unless you visit the drill site). With a 1 1031 exchange, you can maximize the sale of a trailer park. This is by turning it into valuable mineral rights and royalties.

In this guide, we will explain how to 1031 exchange tailer parks as well as go over some key questions you may have such as how to determine the value of your trailer park, how to identify a like-kind property, and more.

How to Sell A Trailer Park

First things first, you’ll have to sell the trailer park. Do you own it for a number of years? Then you are probably well aware that this will not be a difficult step. In fact, trailer parks are one of the lowest multi-unit property investments that can be made today.

With a relatively low barrier of entry and the potential to earn a large sum of monthly rent payments, finding a buyer for a trailer park is rarely a difficult task. Here are a few of the most common methods trailer park owners sell their property:

  • Word of Mouth
  • Selling to an Existing Tenant (Or Shared Group_
  • Online Listings
  • Physical Signs
  • Realty Agents
  • And more

Determining the Value of Your Trailer Park

The value of a trailer park is determined by many factors, some of which can be controlled, while others are strictly circumstantial. In truth, a trailer park is more than just the sum of its property assets, as paying tenants dramatically increases the approximate value of a trailer park investment.

To best determine the total ballpark value of a trailer park, one must consider:

  • The Size of the Property
  • The Current Occupancy Percentage
  • Vacant Lots and Possible New Developments
  • The State, County & Municipality
  • Energy Sources and Rates
  • # of Tenants and Tenant History
  • And more

Of course, a trailer park is going to be as valuable as the highest-paying investor. It is always recommended to get multiple bids, appraisals, and offers when selling a trailer park.

Taxes Paid on the Selling Trailer Parks

Unless you’re taking the cash and headed out of the country to live as an outlaw, there are going to be a hefty amount of taxes to be paid when selling a trailer park. Although they will vary from state to state, the following taxes may be taken by local, state, and federal governments:

  • Income Tax
  • Capital Gains Tax
  • Sales Tax
  • Local Taxes
  • And More

Of course, one of the best ways to reduce the amount of tax paid on the sale of a trailer park, is by using a 1031 exchange.

1031 Exchange Trailer Parks

With a 1031 exchange, a trailer park can be sold and “exchanged” for another asset of greater or equal value.

According to the IRS, the assets must be similar “like-kind” properties. When a trailer park is sold and the property is purchased with 1031 exchange, capital gains taxes will not be applied to the original sale.

Like-Kind Properties for the Sale of Trailer Parks

Although they may not physically resemble some of the similar properties outlined by the IRS, trailer parks can be used in a 1031 exchange to purchase a number of different assets without paying any capital gains tax. Most commonly these include:

  • Mineral Rights and Royalties
  • Apartment Buildings
  • Farms
  • Strip Malls and Businesses
  • Parking Lots
  • Self Storage Facilities
  • Commercial Buildings
  • And More

1031 Exchange Trailer Parks Timeline

After the sale of a trailer park, taxpayers have 45 days to identify at least one like-kind property they are interested in purchasing in order to use a 1031 exchange. Up to 3 properties can be identified regardless of their value. Other limits also apply.

After narrowing down the potential investments, new properties must be purchased within 180 days of the sale of a trailer park in order to qualify for a valid 1031 exchange.

Using an Intermediary to 1031 Exchange Trailer Park

In order to make sure that deadlines are met, paperwork is filed, and the absolute pest properties are identified and purchased, we highly recommend using a 1031 exchange intermediary. Taking the legal and tax weight off of your shoulders will not only save you time, but will also save you a considerable amount of money.

What to 1031 Exchange Trailer Parks For?

As a “like kind” property, both mineral rights and mineral royalties can be purchased in a 1031 exchange after the sale of a trailer park. In some cases, active mineral rights will land investors in a stream of steady income payments for the sale of extracted minerals. On other properties, untapped mineral rights can be flipped, sold, or leased to an interested oil or gas company.

The short answer here is yes: mineral rights are generally going to be a good investment. Although gas, oil, and coal prices may fluctuate from time to time, the market is always going to be strong while large companies identify cost effective ways to extract and use the valuable resources from below the surface of the earth.

How to Maximize Your 1031 Exchange

In order to maximize your 1031 exchange (and minimize the amount of tax you pay), you will want to purchase profitable mineral rights at a reasonable rate. Talking to industry experts, and reviewing a large number of potential mineral rights opportunities is the best way to lower the risk in your investment.

Conclusion

Ultimately no matter how sentinel you may be, selling a trailer park for a lump sum of cash is going to feel pretty good. In order to keep more of that money in your theoretical pockets, a 1031 exchange is a great way to defer capital gains taxes with the acquisition of a new property. With mineral rights and royalties, your investment will go further, as profits from the sale of oil and gas production is a valuable asset in any portfolio.

If you have further questions about 1031 exchange trailer parks, feel free to contact us here.

1031 exchange farmland

1031 Exchange Farmland [Ultimate Guide]

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So you’ve finally done it, you have decided to sell the farmland. Do you have a large sum of money heading towards your bank account? Unfortunately, federal capital gains taxes are applicable. Federal capital gains taxes can take up to 20% of the sale price from your farmland. This is depending on your annual salary,

In this article, we will outline the steps necessary to 1031 exchange farmland into mineral rights and royalties completely tax-free.

How to Sell Farmland

Of course, you can 1031 exchange farmland only once the property is sold. There are a few ways to go about this. On one hand, you can try selling your farmland by yourself. On the other hand, you can utilize a specialized broker or real estate agent. This is for them to do all of the work for you (at a price, of course). As there is a considerable amount of work to, we strongly suggest working with a professional.

Determining the Value of Your Farmland

For most people, farmland includes most if not all of an individual’s assets. What to do to determine the final sale price (and sales tax) associated with farmland? The property and everything it contains should go through appraisal. Most commonly, the sales price of farmlands in the United States is largely by:

  • The Amount of Land
  • # of Buildings and Size (Homes, barns, storage, etc.)
  • Equipment (tractors, irrigation systems, bailers, etc.)
  • Livestock (cows, horses, etc.)
  • Supplies and Inventory (crops, fertilizer, etc.)

Taxes Paid on the Sale of Farmland

All in all, the sale of farmland can bring in a considerable amount of money. With that in mind, it is always going to be taxable in some form or another. Currently, the following taxes are applicable to the sale of farmland in the United States:

  • Federal Income Tax
  • Recapturing of Depreciation
  • State Taxes
  • Federal Gains Tax

All in all, the amount of tax imposed on the sale of farmland can range anywhere from between 20% to 50%. This is depending on all of the variable conditions. With that, eliminating any of the taxations is a surefire way to save a bit of money during the sales process.

1031 Exchange Farmland

As we mentioned earlier, using a 1031 exchange is a great way to lower or eliminate capital gains taxes on the sale of farmland. A 1031 farmland exchange is useable when another property that is under purchaseis similar to it. In buying a “like-kind” asset, former farmland owners are not required to pay capital gains tax on the sale of their estate.

1031 Exchange Farmland – Requirements

In order to qualify for a reduction in capital gains tax with a 1031 farmland exchange, the following timeline must be true:

  • The same taxpayer sells and purchases both assets.
  • New properties must be identified within 45 days of the sale of the farmland.
  • The new property must be purchased within 180 of the sale of the farmland.

Of course, to qualify for a full elimination of capital gains tax, the new property must be of equal or greater value (i.e. trading up). Up to three properties can be identified as potential purchases regardless of their value. For more information on the rules and regulations for using a 1031 exchange, feel free to read our detailed page on the 1031 exchange process.

Farmland Like-Kind Properties

In order to 1031 exchange farmland, the same taxpayer must purchase a new property that is similar to the old one. For the sale of farmland, there are many options within the realm of property that can be exchanged for, completely tax-free. Most commonly, farmland sales are exchanged for:

  • Better Farms
  • Livestock
  • A Home or Apartment
  • Water and Ditch Rights
  • Vacant Land
  • Mineral Rights and Royalties

Using an Intermediary to 1031 Exchange Farmland

In order to make sure the process goes as smoothly as possible, using an intermediary to 1031 exchange farmland is the smartest way to go. Utilizing the knowledge and resources of a licensed professional will not only help you save the most on taxes but will make the process easier along the way.

Ranger Land and Minerals has over 100 years of combined industry experience transforming assets into profitable mineral rights and royalties through 1031 exchanges. Our team of professionals is here to help leverage your farmland for the best possible mineral rights and royalties.

Maximizing Return on Investment

Once you sell the farmland, putting the money into something brand new such as mineral rights or royalties can be very intimidating. However, with the right purchase, your farmland very well may transform into a passive stream of income, profitable beyond any back-breaking labor tending to crops or livestock.

Purchasing Active Mineral Rights: With active mineral rights, cash flow is generated each month as mineral royalties are divided among stakeholders every single month. 1031 Exchanging for active mineral rights can lead to an immediate and ongoing income stream.

Purchasing Non-active Mineral Rights: Alternatively, mineral rights in high-production areas can also be profitable even if they are not currently being used by an oil or gas company. Non-active mineral rights can be bought and sold for profit, or retained through an oil and gas lease. Depending on your negotiation, new oil and gas leases can lead to steady income for years on end.

What to 1031 Exchange Farmland For

More than anything, investments into mineral rights and royalties are a great way to reinvest the capital derived from the sale of farmland. Mineral rights entitle landowners to the valuable resources found below the earth’s surface. Mineral royalties are earned when those resources (such as coal, natural gas, or oil) are extracted and sold in the marketplace.

Ultimately, selling your farmland is a tough decision. Once you’ve done it, however, your next step shouldn’t be so tough. 1031 exchanging farmland to purchase mineral rights or royalties is a great way to reinvest your money without having to pay a capital gains tax. With the right purchase, mineral rights can be a very valuable asset in any portfolio.

mineral-rights-101

Mineral Rights 101: A Guide to Everything that You Own Below Your Property

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If you bought your property in a fee simple estate, that means that you own your surface rights as well as what lies below your property. For those that are new to mineral rights, we’ve put together this Mineral Rights 101 quick guide to help you understand what exactly you own.

What are Mineral Rights?

Mineral rights are a property’s ownership rights of any resource that is found beneath the surface of the earth. Mineral rights can only be owned by individuals in a few countries around the world, including the United States.

Do I Own My Mineral Rights?

Usually, mineral rights ownership is defined in relation to surface rights. Surface rights, as you can imagine, entitle the owner to the surface and structures on the land.

The two most common forms of land ownership are fee simple and split estates. In a fee simple estate, you own every asset in the property from subsurface rights to the air above your house. In a split estate, the property rights can be sold to another person or group of individuals. Check your deed to see the specific information on your mineral rights ownership.

Things that You Own with Your Mineral Rights

Mineral rights designate the ownership of valuable resources such as oil, gas, gold, silver, copper, iron, uranium, etc. In order to extract and sell these minerals, most people choose to sell or lease their mineral rights to an oil and gas company. Here, the oil and gas company would need some access to your property’s surface to explore and obtain the resources.

Things that You DO NOT Own with Your Mineral Rights

Of course, it can get a bit complicated when trying to define what “resources” you actually own. Typically earthy materials (like sand, limestone, gravel, etc.) belong to the surface rights owner. Likewise, even if the water is in the plot’s subsurface, water rights are typically owned by the property’s surface rights owner.

Image Credit: Joel Deluxe/via Flickr

If you have further questions related to this mineral rights 101 guide, feel free to reach out to us here. 

Oil and Gas Royalty Deductions

Oil and Gas Royalty Deductions Guide for Tax Season

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There are only a few better feelings than getting your oil and gas royalty check in the mail. Whether you have decided to lease your mineral rights or you have aided in an operation’s production, the extraction and sale of oil or gas earn you a nice bit of money each month. Of course, all is fun and games until tax season. In this article, we will outline the most important things to know about oil and gas royalty deductions.

Depletion Allowances for Oil and Gas Royalties

Mineral rights are very valuable, that is until the resources have all been depleted. The IRS recognizes this and permits a depletion allowance on oil and gas royalty payments. Depletion allowances let property owners deduct the loss of value in the property’s subsurface, as well as any incurred expenses associated with owning the royalties.

Here, taxpayers can write off a portion of their income. Most commonly, people choose the standard 15% depletion deduction from the gross income. In other cases, heavily invested individuals can calculate the approximate remaining oil reserve. From there, they base their deduction on the amount of extraction that tax year.

Oil and Gas Royalty Deductions

Once your royalty checks start coming in, you may notice something. Usually, it is that there are some taxes that are out of your payment. Although the amounts vary between states, most U.S. states take out a severance tax on oil or gas production. This amount can be a deduction from your gross income. This includes any other business taxes or fees that have an association with the production.

Bonus Deductions

If you signed an oil and gas lease, then you may have received a nice upfront bonus payment. In the eyes of the IRS, this is considered ordinary income, in the rental property classification. There can be a deduction on your Schedule E on any bonus payment you receive. This includes any costs (like legal fees) in association with the lease negotiation.

If you have further questions about oil and gas royalty deductions, feel free to reach out to us here. 

getting oil companies to drill on your land

How to Get Oil Companies to Drill On Your Land

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If you own mineral rights in the United States, you may be sitting on a potentially large stream of income. Thousands of property owners across the country have contacted oil companies and investors in order to drill and profit from the precious minerals in Earth. This is your guide on how to get oil companies to drill on your land too.

In general, this is accomplished one of two ways: by selling or leasing mineral rights. In this article, we are going to explore the pros and cons of selling or leasing your mineral rights as you seek to find an answer on how to get oil companies to drill on your land too.

Selling Your Mineral Rights

When you sell your mineral rights, an interested party becomes the owner of your property’s subsurface and has the right to explore it for valuable minerals. Aren’t you selling directly to the oil company? Then, the buyer likely has plans to start or continue a drilling operation.

Pros of Selling Your Mineral Rights

  • Mineral rights sales are generally settled with large lump sums of cash.
  • The sale of mineral rights is eligible for a 1031 exchange, which can be used to strategically acquire another property without the income tax.
  • You will no longer have to pay taxes on your mineral rights or oil royalties.

Cons of Selling Your Mineral Rights

  • Your mineral rights have the potential to become more valuable in the future.

Leasing Your Mineral Rights

Alternatively, if you do not want to give up your mineral rights entirely, you have the option to sign an oil and gas lease. In a mineral rights lease, you can sign a temporary agreement. This is to let an oil and gas company explore, procure, and sell minerals from your property.

Pros of Leasing Your Mineral Rights

  • You may receive an initial bonus, and signing payment.
  • If the production is successful, you will earn oil or gas royalties on the precious minerals produced.
  • You still maintain ownership of your mineral rights and have only agreed to the temporary exploration of the site.

Cons of Leasing Your Mineral Rights

  • Leases dependent on large oil production levels may not cash out as well as expected
  • Oil lease ownership can change hands without your involvement.

Contacting the Right People

Once you have decided whether a lease or sale is best for your mineral rights, then it becomes time to get into contact with the right people. There are many companies and individuals who are going to be interested in acquiring the right to drill on your land for oil or gas, so it is important to work with someone you can trust. Ranger Minerals is a Texas-based company with over 100 years of combined industry experience that can help with mineral rights transactions all across the country.

oil royalty buyers

Who are Oil Royalty Buyers?

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If you own mineral rights, then you can potentially earn a large amount of money by finding the right oil royalty buyers. Frequently, those buyers may actually find you. We put together this article to help you along your journey to sell your oil royalties or mineral rights.

Individuals vs. Companies – Oil and Gas Royalty Buyers

There are thousands of individuals and companies that are actively looking to buy mineral rights and oil royalties. Although the best deal should always prevail, there are a few general trends when selling oil or gas royalties to oil royalty buyers.

Person to Person Oil Royalty Purchases

Although these transactions are more common as gifts or in a will, oil royalties and mineral rights often do change hands between individuals. Here, there is not going to be as many oil royalty buyers as a commercial transaction. You will want to make sure that the person buying your mineral rights is someone you can trust. As a bonus, person to person transactions generally have a better chance to include personalized clauses to best suit your needs.

Person to Company Oil Royalty Purchases

Most commonly, a landman representing a larger oil or gas company will have an interest in buying your mineral rights. Whereas negotiations like these typically fall under strict company guidelines, there is a chance that the added resources of a firm will result in a better overall deal on the seller’s end. Because every individual case is different, it is advisable to explore individual and corporate sales opportunities.

How to Value Your Oil Royalties for Sale

Because oil and gas royalty sales are not always made public, the only way to truly value your oil royalties is by collecting multiple offers. Investors will do their due diligence in order to find the best possible price for your oil royalties, while still making it a profitable venture for themselves. By analyzing local historic data, inspecting the property, and factoring in current market prices, your potential buyers will quickly make the value of your oil royalties apparent.

Speaking to An Expert

Before you sell your oil royalties, it is a good idea to speak to an expert, like Ranger Land & Minerals. No matter how inciting an offer may be, it is crucial to communicate with someone who knows the ins and outs of oil and gas royalty transactions in order to point out red flags and ensure the best possible deal is being made.

A Quick Guide to The Oil and Gas Laws of the United States

Oil and Gas Laws of the United States: A Quick Guide

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Oil and gas ownership has one of the most interesting legal histories in the United States. The United States is one of the only countries that allows for private ownership of minerals found on the earth. Within the state, the laws surrounding mineral rights and oil and gas laws vary greatly between each state. In this article, we are going to outline the essential oil and gas laws to be aware of in the United States.

Who can own oil and gas in the United States?

The term when rights to own oil and gas below the surface of a property is “mineral rights.” In the United States, mineral rights is claimable by private individuals. Moreover by corporations, Indian tribes, or by local, state, or federal governments. The ownership and transfer of oil and gas rights are mainly operated under regional statutes and common law. These both fall beneath constitutional and federal law as well.

Oil and Gas Rights as Property

Over the past 150 years, oil and gas ownership in the United States has diverged into a huge portfolio. For private oil and gas rights today, the mineral rights of a piece of land can be sold, bought, or leased. It is as if they are any other piece of property. Mineral rights or “subsurface rights” is purchasable, sellable, or leasable independently. Moreover together with a property’s surface rights.

Finding Oil and Gas on Public (Federal or State) Property

The General Mining Law in the United States allows individuals and companies to “locate” mining claims on public lands. At the federal level, there is BLM (Bureau of Land Management) land. This is where individuals can explore the area for potentially valuable minerals. An individual does not become the subsurface rights owner of public land. With approval by the federal government, the individual can have access to develop and extract the minerals.

The same system is in place for state-owned land. The specific oil and gas laws surrounding ownership and transfer vary from state to state. For a full list of Mineral Rights Laws by state, see this index page from MineralWeb.

How Much Money Can You Make From an Oil Well?

How Much Money Can You Make From an Oil Well?

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What is one of the most commonly asked questions from current and future mineral rights owners? Simply, how much money can I make from an oil well? Of course, there are an enormous amount of variables and individual circumstances, but an oil well on your property (or someone else’s property) can lead to a very high-income revenue stream. In this article, we are going to layout a few scenarios. Scenarios to help explain the potential money you can make from an oil well in the United States.

Variables that Determine Your Oil Well Earnings

No two oil wells are alike. So how to be considered for the next state or private drilling contract? Well, your land must be up to pretty high standards in terms of how profitable an extraction operation may be. When looking for new land, oil companies look out for:

  • Property Size
  • Property History
  • Estimated Number Size of Oil Reserves

If your property looks good, then a contract will be drawn up to compensate you for a portion of the minerals extracted and sold from your oil well. The amount of money you can make from an oil well each month will be based on your:

  • Percentage of Mineral Rights Ownership
  • Royalty Percentage as Defined in the Lease Agreement
  • The Price of Oil
  • The Volume of Oil Produced and Sold

What is an Oil and Gas Lease Assignment?

A typical assignment of oil and gas leases will grant all of the assignor’s interest in a lease, a specified percentage of the assignor’s interest in a lease, or a specified amount of the oil and gas lease.

Oil Royalty Earnings Calculator

If you are looking for a quick estimate to determine how much money you can make from oil well, then you can use this helpful oil and gas royalties calculator . By using the variables defined above, this tool can help you get a baseline estimate for home much you can make from your producing mineral rights. Depending on your share of the production, oil royalty payments can range from as little as a few dollars to hundreds of thousands of dollars per month

Oil and Gas Leases For Dummies 2020

Oil and Gas Leases For Dummies 2022

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Updated: July 25, 2022

Made for those who are new in this industry, oil and gas leases for dummies is a quick guide on some of the basic ins and outs of the industry’s most commonly asked questions. Below, we will outline some beginner-friendly information in order to give you a good foundation for understanding how an oil and gas lease works.

What is an Oil and Gas Lease?

An Oil and Gas lease is a common agreement between a property owner and an oil and gas company, giving the company permission and access to produce valuable minerals from the property owner’s land.

How Does an Oil and Gas Lease Begin?

More often than not, an oil and gas company will determine that a piece of land is likely to be a highly producing plot for oil, gas, or other valuable minerals. They will then approach the owner of the land and offer to lease it in order to explore and drill below the surface.

If you are a mineral rights or surface rights owner being approached by an oil and gas company that would like to lease your land, it is highly suggested that you speak to a professional before agreeing to anything. Doing so will enable you to earn the highest possible royalty from any oil or gas produced from your land.

When Does an Oil and Gas Lease End?

Although all contracts are different, most oil and gas leases follow a familiar format. Initially, there is a primary lease term with an ending date that is honored if the land is not actually drilled or producing minerals. If the land is being actively explored or mined, then the lease will go into its secondary term. In the secondary term, an oil and gas lease will end on a specified date or after a predetermined period of idleness such as 60 or 90 days.

Should I sign an Oil and Gas Lease?

As mentioned above, it is always best to consult a professional before signing an oil and gas lease. If you are a mineral rights owner and are approached to sell or lease your rights by an oil and gas company, you may be headed towards a profitable venture if you take the right steps to fully understanding your oil and gas lease.

1031 exchange tax for dummies

1031 Exchange Tax for Dummies: Deferring Capital Gains Taxes on Mineral Rights

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Selling mineral rights or royalties is a great way to cash in on an extremely valuable asset. Whenever you choose to sell your mineral interests, however, the huge influx of cash is subject to a hefty capital gains tax. In order to maximize your earnings, read this “1031 exchange tax for dummies” guide and you can defer the capital gains taxes on your sale with a 1031 exchange for another qualifying property.

What Kinds of Property Qualify for a Mineral Rights Exchange?

So what qualifies for 1031 exchange? In order to qualify for a 1031 exchange to defer capital gains tax, sales of mineral rights must be exchanged. According to the IRS, it should be for a “like-kind” property. This means that you could obviously use your profits to invest in another mineral rights estate, or you could purchase another, similar property such as surface rights or real estate. Other types of property include:
1. Farms
2. Land
3. Businesses
4. Parking Lots
5. And so Much More

So basically, it is possible to 1031 exchange multiple properties as long as it is qualified. You just also need to process the legal 1031 exchange documents needed.

Avoiding Paying Capital Gains Taxes on Lesser Property

If you are using a 1031 Exchange to purchase new property with the sale of your mineral rights or royalties, it is important to note that the new property must be of equal or greater value to the sale of your mineral rights or royalties. If you choose to buy something of lesser value, the difference will be calculated and taxed.

The Benefits of a 1031 Exchange

Over $50 billion worth of property utilizes a 1031 exchange each year, but why? Well, by deferring capital gains taxes, 1031 exchange users are able to:
1. Maximize the amount of capital used to invest in new properties
2. Postpone tax payments
3. Diversify their portfolios without taxation

How to Begin a 1031 Exchange for your Mineral Royalties

A Qualified Intermediary is necessary for negotiating a 1031 exchange and the process can be grueling. Ranger Minerals have a team of representatives that are well versed in 1031 exchanges that can help assist you in maximizing the sale of your mineral rights or royalties.

Again if you have 1031 exchange multiple properties, make sure that you have all the 1031 exchange documents needed. Remember, who and what qualifies for the 1031 exchange are those with knowledge on how it works.

If you learn about this 1031 Exchange tax for Dummies guide, we have more in store for you. Reach out to us here.