I guess you mean property taxes on the actual rights as opposed to income tax on your royalty payment.
The property taxes are collected by the counties. They assess the mineral rights by a formula which differs if there is any production (of oil and/or gas and other petroleum products or even I guess of things like silver and gold!) and thus a payment to the mineral owner in the form of a royalty, or a property that has no production. For the latter, there is a formula based on the acreage (for example mineral rights on a 50 acre tract), the amount of the mineral ownership (for example, 1/2 minerals on a 50 acre tract), and maybe something else. The county assessor gets the production data (the $ amount of royalty paid to the mineral owner by the company) and puts that with a property, then the county has the assessment. This might be $100 or $1000 or more. I think $100 is the minimum assessment even for a tiny non producing tract. This assessment is then multiplied by the county's tax rate to get the actual property tax $ amount. This is changed or reviewed every year, and in July the new taxes are posted and the bills sent out. If the property changes ownership during the year, the next year's tax is still in the old owner's name and changed for the following year. However a new owner can (should be) listed as "care of" with the new owner's address.
I hope that helps. I am not an attorney or an accountant but am someone who pays property taxes on WV property.
If you mean state income tax on any royalty on property in WV, please ask. I do that too.
Maybe someone can correct me or add something.
Thanks Nancy that's very helpful!
If, for example, I sell my land but retain the mineral rights on non-producing land - am I still going to pay property taxes on those mineral rights without production? Or would I only pay after production? (assuming I only own the mineral rights b/c if I own the land I know I will have to pay prop taxes anyways)
Yes you will have to pay the county property tax on whatever the assessed value of that amount of mineral rights is determined to be, by that formula that they use. Your acreage times your ownership amount. It sounds like your example retains 100% of the mineral rights but sells the surface. The formula would be whatever your acreage amount calculates to be, for the assessment. Then multiply by the county tax rate. It certainly won't be as much as the amount for the fee interest, the minerals and the surface.
A call to your county assessor could help answer the question. The formula is developed by the State and altered sometimes. But the county assessor can give you the estimate for the actual tax. In my case, the tax is collected by the Sheriff's tax office but the assessor is the one with the information.
If the property is leased but not drilled and producing, that is still taxed like undeveloped mineral rights, I think. The lease bonus money is unrelated to the county property tax. If the well starts producing, the producer (leasing company) reports the royalty money paid to the mineral owner to the State tax dept. and then the county changes the assessment to reflect that.
There is about a 2 year delay from the start of royalty payments and the change in the county tax assessment, as I understand it.
Thanks so much Nancy! That's why this is a terrific forum!
I'm glad it was a help. Others have helped me over the years.
If you learn something when talking with your county assessor that you think might help others, please share.
I'm somewhat curious about your hypothetical situation. The fee owner sells surface and retains all minerals. The assessor now has to set up two separate tax accounts. They don't change the owner (for tax ticket purposes) for a regular ownership change such as a straight out sale of mineral rights, or an inheritance. How do they handle the situation of who gets the tax bill next July? I was told that the name on the account on July 1 is the name for the tax bill for the following July. If you sell or change ownership on July 2, the new owner won't get the bill (except an "in care of") until almost 2 years from then. Anyway, just curious and if you find out anything, please share!
Yes definitely will do! I might have to sit down with an accountant so I can share the details if that happens
I think my specific curiosity is an assessor question but your income tax things would be definitely an accountant question!