Capital Gains eCourse > Lesson 6
4 – Mineral Rights
Lesson 6 of 15 · About a 3-minute read · By Lane Kawaoka, PE · Updated November 2026 · Course home
Short answer
Real property mineral rights can qualify as like-kind property for a 1031 exchange, so some investors exchange out of rentals into mineral or royalty interests. Income depends on production and commodity prices, so it can swing from year to year.
Mineral Rights: Another Route to Consider 🌟
We delve into the world of mineral rights as an exotic capital gain solution, perfect for those tired of traditional property management. Learn how mineral rights can offer tax benefits similar to oil and gas investments and qualify as a like-kind exchange under the IRS for 1031 exchanges.
Mineral rights might sound all fancy and like it’s all about oil and gas investments, but it’s actually about owning the land—well, the stuff underneath it. The IRS views this as real property, which means, yes, you can exchange into this. It’s not your typical real estate play like single family homes or warehouses, but it still counts.
We’ll discuss the importance of being an accredited investor for such endeavors, along with potential risks and the importance of finding trustworthy operators in the oil, gas, and mineral sectors. Join the community at theWealthElevator.com/club.
Lesson summary
Mineral rights mean owning what is under the land, such as oil, gas or other minerals. The IRS treats them as real property, so they can count as like-kind replacement property in a 1031 exchange, which makes them an option for investors who want out of managing rentals. In this short video I cover how the tax treatment compares with oil and gas investments, why most of these deals are open only to accredited investors through syndications, and the problems in this market, including how hard it is to find operators you can trust. A 1031 exchange has strict rules and deadlines, so work with a qualified intermediary and your CPA.
This is educational content, not tax, legal, or investment advice. We are not attorneys, CPAs, or financial planners. Please let us know if you need a referral to a CPA, lawyer, or other vendor here.
Key takeaways
- Mineral rights can replace real estate in a 1031 exchange when they qualify as real property interests.
- There are no tenants to manage, but income is tied to production and prices.
- Check the title, the operator and the lease terms before you buy.
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Talk it through with us
Mineral rights are a niche. It helps to compare notes with investors who already own them. Join The Wealth Elevator investor community and book your onboarding call with us.
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