Robyn Seymour - Investment in 1031 Royalty Interests

If you have any problem with the traditional replacement properties and looking for a new way to expand your real estate group then investing in 1031 royalty interests in an oil or gas project may be a viable alternative strategy.

Basically, a 1031 Exchange is a way for investors to take the money they make off of the sale of a property, and reinvest it into another property. One of the main reasons for doing this is to defer capital gains taxes from the relinquished property to the replacement property. If you currently own real estate, and you're looking for a replacement property, you might want to consider investing in 1031 royalty interests in an oil or gas project . The IRS has some tricky rules when it comes to exchanging oil and gas rights. For example, minerals beneath the surface are considered part of the real estate, but when they are extracted they fall into a different category. You can exchange 1031 royalty interests for another royalty interest, as well as for a hotel, office building, shopping mall, or any other "like-kind" property.

In a standard oil and gas investment, investors have "subsurface interests" or "mineral rights" to the oil and gas reserves which lay beneath a shared property. One type of interest is called a "royalty interest." Under these circumstances, the investor is the owner of the mineral rights, however the owner plays no role in the exploration or the drilling of the oil and gas; they simply are entitled to a percentage of any extracted minerals.

Oil and gas interests have several very attractive characteristics. For one, the demand for oil and gas is virtually unwavering. Also, in many of the oil and gas deals, there are no closing costs or additional fees to consume part of your investment. Finally, oil and gas investments have a significant upside in respect to returns. If you are interested in making an exchange, 1031 royalty interests may provide a profitable avenue for you. It is very important to perform your homework on the subject of royalty rights to make sure that you fulfill with laws regarding exchange of oil and gas rights of the federal and state.