When you sell Mineral rights/Royalties is it treated like real estate? If so can you reinvest this money into like property to avoid paying taxes? and would you have to reinvest the entire amount?

On a long term capital gain (ie; minerals) can you deduct what you paid for the property, including interest and improvements before you figure out your tax?


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In Ohio the sale of mineral rights and or royalties are considered capital gains .  Long term if owned for more than a year I think.  You can invest that in real estate to avoid paying taxes but if you sold mineral rights for 500 thousand and bought a property for 400 , you just pay tax on the difference of 100 thousand.  There is a time frame on this though. 

Correct. I think there is a time frame of 30-45 days to acknowledge the next property to be purchased. Then a 90-120 day time frame to close. Something of this nature. Days arent exact but in the range i believe. I was looking into the same thing, but didnt end up selling minerals

26 U.S. Code § 1031 - Exchange of property held for productive use or investment


Thanks everyone, just wanting to be informed


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