Estimate what your mineral or royalty interest may be worth based on your monthly royalty income — and what you could defer by exchanging it through a 1031.
Producing royalty interests are commonly valued as a multiple of annual cash flow — approximately 3 to 6 times (36 to 72 months of income) — adjusted for decline rate, operator quality, commodity prices, and remaining reserves. Non-producing acreage is valued differently, typically based on comparable sales and prospective resource potential.
The multiple a buyer pays reflects how confident they are in the durability of that income stream. A shallow-decline, operated-by-a-major royalty in a proven basin may trade toward the high end; a steeper-decline or single-well royalty may trade at the low end.
Perpetual mineral and royalty interests are real property under U.S. tax law and qualify for 1031 exchange treatment. A sale can be exchanged into other like-kind real estate — including Delaware Statutory Trusts (DSTs) — allowing the owner to defer capital-gains tax on the appreciation while converting variable, commodity-exposed royalty income into diversified, professionally managed real-estate income.
Educational estimate only. This tool is for general illustration and is not tax, legal, or investment advice. It uses simplifying assumptions and the figures you enter, which may not reflect your situation or current law; depreciation recapture, net investment income tax, state taxes, depletion, decline rates, and other items can change the result materially. Figures are illustrative and not guaranteed. Consult your own qualified tax and legal advisors before acting. Not an offer or solicitation. DST interests are sold only to accredited investors via private placement memorandum. Securities offered through Aurora Securities, Inc. (ASI), member FINRA/SIPC; Baker 1031 Investments is independent of ASI.
Producing royalty interests are commonly valued as a multiple of annual cash flow — often 3 to 6 times — adjusted for decline rate, operator quality, commodity prices, and remaining reserves.
Yes. Perpetual mineral and royalty interests are real property and can be exchanged for other like-kind real estate, including DSTs, deferring capital gains.
To convert declining, variable royalty income into diversified, professionally managed real-estate income — and to defer the tax on a sale.
