Real estate taxes on minerals

I received about 40 tax bills, for oil and gas minerals only, for real estate I sold many years ago, but reserved the minerals. Each acre has a tax value of $200.00 even though I have not even leased any of the acreage. I spoke with the Auditor's office and the gentleman seemed certain that the county has the right to do so even without production or even a lease to drill. Does anyone else have any thoughts on this matter. Thanks...

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Permalink Reply by Wayne Shelley on March 4, 2013 at 11:40am

Why did they stop taxing in your 4 county region?

Permalink Reply by Janice L. Hancharick on March 4, 2013 at 5:42pm

The state realized a fair tax rate couldn't be established on an unknown entity, and when the big profits were gone in the shallow oil & gas fields, what was left?  That was the "unknown" .  For a few decades after the major companies left, the sub-surface AC were still taxed but @ a low rate, then finally counties were allowed to stop levying that tax altogether.

Now OGM royalties are taxed as part of your income tax. Of course first there must be a well or nothing is coming up!

Permalink Reply by Frank Walker on February 26, 2013 at 9:59am

BGM

I agree with you.  But the OP appears not to understand the importance of mentioning his state, if for no other reason than as a courtesy to other participants here.  Many folks actually don't realize how laws differ from state to state.  They figure, instead, that what's law in Ohio, for example, is also law in WV or in PA or in whatever other state.  We know that's not true at all.

Anyway, FWIW, I'm pretty sure the OP is in Ohio and is writing about Ohio.  A confirmation of that would be nice and it would be helpful to all of us.  I'm not holding my breath, though.  

Permalink Reply by BICS on February 26, 2013 at 7:21am
Permalink Reply by David Perotto on February 26, 2013 at 12:02pm

Counties should not be taxing subsurface rights with a property tax. The only fair way to tax subsurface is with a production tax. What happens in twenty years when production stops? Do you continue paying property taxes or just default on the taxes and say the heck with it? Subsurface rights are only valuable when the property is producing. Just my two cents.

Dave

Permalink Reply by Janice L. Hancharick on February 27, 2013 at 6:17am

Dave, you're just trying to be logical!  What you describe (20 year time span) is exactly what happened across PA after shallow gas/oil reserves were no longer profitable, and the phrase "Gone to TX (& OK)!" became commonplace.  Taxes on subsurface rights were levied for years after production was stopped.  It has only been fairly recently that counties stopped the taxing the OGM  acres.  Nice breather for rights holders!

This is a business that has as many quirks over the years as there are fleas on a barn cat. Ever here about the "spirit wells"?  No kidding!

0ym9x5ag7ury2Permalink Reply by 0ym9x5ag7ury2 on February 26, 2013 at 1:18pm

hunter,           West Virginia taxes us on minerals and hammers us for coal, yes, where God left it. If your land is in WV take a look at the Coal Tax, there is a nice write up justifying the states right to tax coal.

I hope Ohio doesn't learn from WV's Coal Tax, or we will all be trying to give the minerals back to the state to prevent breaking our bank accounts.

I think the WV taxpayers were asleep at the wheel when these laws were pushed through at Charleston. I read in the Coal Tax write up that WV has 36% of the population living off handouts from the government which they use to justify taxing coal without production.  I won't mention the taxing the trees!    Ron

Permalink Reply by Nancy Mosley on February 26, 2013 at 3:10pm

The tax is small on nonproducing minerals. And it is a good way to prove ownership. I would hate to be in a state where the minerals revert to the surface owner after a certain time of inactivity . There are two ways of looking at it. 

Permalink Reply by Denver Gallentine on March 4, 2013 at 9:39am

Nancy, You are so right. As I stated in a post a few minutes ago, I am paying a very tiny tax per acre on mineral rights in West Virginia (less than $3.00 per acre) and it is an excellent way to legally demonstrate ownership, but if Hunter 4440 is being asked to pay $200.00 per acre on undrilled oil/gas that becomes a bit-of-a-concern.

Permalink Reply by Nancy Mosley on March 4, 2013 at 3:04pm

Yes, very big difference. You're right.

Permalink Reply by Skid on March 4, 2013 at 9:44am

I don't know where you are located but I (and before that my father and grandfather) have been paying taxes on OGM rights for property with and without wells in WVa for decades. It is minimal, though. We have 124 acres for a total tax bill of less than $100/year.

Permalink Reply by Denver Gallentine on March 4, 2013 at 11:42am
Skid, Exactly. We were fortunate to Inherit mineral rights that were bought in 1920. The family has paid the taxes for those rights since 1920. The tax bill is minimal so I have no problem with it because as several people on this site have said it is a great piece of proof (paper trail) to prove ownership. My only concern is if counties decide to start charging $200.00 per acre for undrilled upon land. This could become unaffordable to own mineral rights.

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