WHY 1031 WITH STACK IS BETTER
Whether you need $100,000 or $5,000,000 in replacement property for your 1031 Exchange, we can provide the exact amount in dollars of mineral acres needed to fit your exact 1031 exchange needs.
Mineral ownership offers a diversification to traditional investment real estate while still providing monthly cash flow and underlying asset value. We also allow purchases in multiple sections in multiple counties to greater diversify.
With more than 20 years of experience in the oil and gas sector, we have completed multiple transactions in real estate, 1031, mineral ownership, royalties, and we offer extensive market knowledge.
Although tax-deferred exchanges involving mineral rights are not as widely known as more routine exchanges of traditional real estate investments, in many cases a farm, ranch, rental property or commercial center can be exchanged for mineral rights or water rights (or vice versa). As a result, a tax-deferred exchange can be used to diversify a real property heavy investment portfolio, or permit an investor to move away from property dependent on rents and maintenance obligations into an investment in which oil, gas or water rights provide investment income. In these uncertain times for traditional real estate investments, many investors are looking for income generating alternatives.
What Properties Qualify for Exchanges
When considering selling investment property and deferring taxes through a 1031 exchange, keep in mind that the IRS recognizes only certain properties for an exchange. The property must be a “like-kind” property. This basically means that the proceeds from the sale of investment property can only be used to purchase other property of the same nature or character. This can include other investment real estate or mineral rights held for investment. Keep in mind that to maximize your benefit, the property purchased must be of equal or greater value than the property sold. If the property sold is less than the property purchased you must pay capital gains tax on the difference.
45/180 Day Rule
The IRS is very strict when it comes to the timing between selling your investment property and buying mineral rights or another piece of real estate. The IRS allows 45 days after the sale of your property for you to identify another investment. Then, the IRS allows 180 days between the sale of your property and the closing of the new purchase of mineral rights. With this in mind, it is important to have a very good feel for what minerals you will be exchanging for your investment property in order to keep in compliance with the 1031 exchange rules.
How to Initiate a 1031 Exchange
1031 exchanges can be a complicated task involving a plethora of documents, lawyers, and confusing legal jargon. Investment property owners often rely on a qualified intermediary to help streamline the 1031 exchange process. Qualified intermediaries are responsible for preparing all the documents for the 1031 exchange and ensuring that the funds are safely and properly exchanged. They also act as advisors during the process to ensure that you receive all of the tax benefits possible from the 1031 exchange. Stack Royalties can help quickly and designate a replace property in the form of mineral rights so typically an intermediary is not required.