WV Real Estate Taxes on Minerals

Mineral interests in WV are taxed the same as your home. You will pay 60% of the appraised value on the minerals at the levy rate for your county. The value of these minerals in based on WV Code procedures and is the same for all counties in WV. They all use the same formula methodology. 

Once gas is being produced, the assessed value for both the working interest and royalty interest will increase, sometimes substantially, because the assessment is then based upon the amount of income generated to the producer, and the amount of royalties paid to the property owner. This income information is supplied to the West Virginia State Tax Department by operator of the well. The State Tax Department, not the Assessor's Office, uses this income information to determine the assessed value. 

The appraisal formula for producing wells is somewhat complicated because it includes estimating annual production for 1st year wells, utilizing actual royalties for 2nd year wells, and calculating a 3 year average for older wells. The appraisal model then capitalizes that value to predict a future income stream and then discounts that future income to a present worth value. In our area the appraised value of the royalty interest usually equals 2-5 times the amount of one year’s income. The assessed value would be 60% of that amount. 

Everything is on a 2-year delay in Royalties. Therefore, your 2018 tax bill is based on 2016 production numbers. A quick calculation mineral owners can use is “Income X 5 X 60% X levy rate”. This calculation will usually be a little high but get you close to your tax amount. You can also use this calculation to estimate future taxes. 

If there is a question about the assessment and valuation of your minerals, contact your local county assessor’s office. You should contact them by the end of January. You can ask for a review of your assessment by the Assessor's Office at any time during the year if you believe either of two things: 1) items that affect the value of your property are listed incorrectly; or 2) the estimated market value is too high and you have evidence that similar properties have sold for less than the market value of your property. You have a right to filing a written protest with the Clerk of your County Commission sitting as a Board of Equalization and Review. 

 

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