About Oil & Gas
A 1031 exchange (Section 1031 of the Internal Revenue Code) allows an investor to sell a property that’s been held for investment, such as raw land or a building, and then reinvest the proceeds of the sale into"like-kind" replacement property. In this transaction, there is no gain or loss. Therefore the investor defers all capital gains taxes. The 1031 exchange has become a powerful real estate investment strategy that defers taxes and offers the potential to build and maintain wealth.
In the early 1940s, the courts ruled that oil and gas royalties qualify as "like-kind" replacement property. Since the introduction of the first energy-based 1031 exchange programs in the early 2000s, oil & gas investment or energy replacement property exchanges have become one of the largest growth areas in the estimated $5.4 Billion per year fractional property ownership industry.
To their advantage, oil & gas royalty owners do not invest in the equipment or operations of drilling and exploration, nor do they get billed for all the costs of exploring, drilling or operating wells. Yet oil & gas royalty owners receive a share of the monthly revenue generated by each oil and gas well. Consequently, oil and gas royalty interests can represent an attractive replacement property option for investors seeking monthly income without the headaches of property management.
If you would like to learn more about 1031 exchange investing you can contact us or attend an educational seminar hosted by Rich Giglio. These 1031 exchange seminars are held throughout the country and explain many options of oil & gas investments and real estate purchases.
For more information, please contact us.
Nothing in this website should be deemed to constitute tax, legal or accounting advice. Investors are urged to consult their own tax advisors.