A 1031 exchange maximizes the amount of capital you have available to invest, which helps not only maximize potential personal investment returns but also helps promote the overall economic health of the nation.
Mineral/royalty ownership in unconventional shale plays provides exposure to upside potential. As continued development “proves up” additional reserves, the market value of royalty interests has the potential to increase, resulting in a better overall ROI.
A 1031 exchange into minerals/royalties provides exposure to non-market correlated cash flow potential. Unlike commercial real estate that is driven by rents, royalty cash flow is generated from a well’s monthly production sales. Additional cash flow may be added as new wells are drilled on the acreage.
A 1031 exchange allows investors to diversify their portfolios while deferring capital gains taxes
A mineral lease and mineral royalties are considered real property for federal tax purposes and may be eligible for a 1031-exchange.
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