I got a tax bill from DeWitt Co.stating I owe property taxes on Royalty Interest. I do not own the well or the property it is on. so why do I owe "Property Taxes" to DeWitt county, Yoakum school district, Yoakum Hospital andPecan water district.
Do you own minerals or a royalty interest under a well or wells in DeWitt County? If so, you will likely be paying property taxes.
Yes.I own about 1/100th mineral rights on two wells in DeWitt County. I do not own any real estate, just mineral rights. What happens if I don't pay them? Will the county confiscate my mineral rights and sell them at a tax auction?
Texas Tea said:
Do you own minerals or a royalty interest under a well or wells in DeWitt County? If so, you will likely be paying property taxes.
That's exactly right. It might take a year or a few years, but when they get around to it, they will put them up and sell them at a tax auction. Minerals aren't taxed unless there is production, so they might sit for decades with no taxes, but as soon as there is production, they are taxed just like surface property. If you feel that they are not valued properly, you can protest the appraisal, but I believe the deadline for that might be today (but you should check your Notice of Appraised Value).
Thank you very much.
Minerals are never assessed for ad valorem property taxation, royalties are.
Royalty interest is considered a type of "mineral interest" according to Texas courts. "All mineral interests (and variations thereof) are an interest in land, which is real property, which is taxable for ad valorem purposes.
False. At least in Texas, the ad valorem property taxes are not assessed against the minerals per se. If they were, then the bonus consideration received by a mineral owner would be assessed by the Central Appraisal District, but it is not (although the bonus consideration IS subject to federal income tax). Only the royalties reported to the CAD by the operator are assessed and taxed.
Pete, I think you misunderstood what I was saying. The law says that all types of mineral interest (royalty, overriding, working) are "mineral interests". Royalties are considered "real property" because a mineral interest (and all varieties I mentioned earlier) are an interest in land. Real property is taxable for ad valorem purposes. Personal property (not owned by a business) is not. This is for Texas only, by the way. And you are correct, in Texas we are not being assessed on the mineral interest, but rather the royalty interest - which is still an interest in land (so the courts say).
No, I did not misunderstand. RI / ORRI / WI are all considered real property or "an interest in land," I don't dispute that. What I dispute is the statement by somebody else that "Minerals aren't taxed unless there is production." Minerals per se are never assessed or taxed, only what you refer to as "mineral interests" and what I referred to as royalties, meaning income from production.
We're splitting hairs here and having a very technical discussion/disagreement on matters that we are all in agreement on. You both are correct, you're just using different terms. "Tomayto, tomahto"
Yes, I would agree with that. We are basically saying the same thing. I just did not want anybody to think that all aspects of mineral ownership, such as the bonus consideration, are subject to the property tax. Over and out.