I am leasing the mineral rights for a very small acreage in Duchesne County to Ovintiv. This is a paid-up 3-year lease with payment coming to me as a $100 “bonus”. What taxes will I need to pay? Federal income tax, for sure. Utah state income tax? (I’m not a Utah resident.) County and city taxes? Severance tax? Also, how is property tax handled for mineral rights?
You would owe federal and state taxes on the lease bonus regardless of where you live.
If they bring on production, severance taxes and other taxes would start. From my understanding, UT doesn’t tax mineral properties from a property tax perspective bc they have the state income tax
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I had thought there was property tax on mineral rights in Utah, based on indirect evidence, namely… While I was Googling on the tax question I found a reference to a court case in Utah, Jordan vs Jensen, where the central issue was that mineral rights had been severed from surface rights. The surface rights owners didn’t pay the property tax on the mineral rights, the actual owners of the mineral rights never received notice that the tax hadn’t been paid, and so the county seized the mineral rights and sold them.
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