5 Benefits to Owning an Oil Well
Owning an oil well can provide you with several benefits. Here’s a short rundown of some of the things you can expect:
Deductible drilling costs
Oil investments come with generous tax breaks. If you have enough capital for it, you might want to explore the merits of being an oil and gas investor. Two of the advantages you can look forward to are deductible intangible and tangible drilling costs, says the Investopedia.
Active vs passive income
The tax code also states that a working interest in gas and oil involve losses that are incurred with an active income. These can be offset against other forms of income, giving you much more leeway in your expenses.
You don’t have to be a big investor to enjoy the benefits of owning an oil well. There are tax exemptions for small producers as well. Also referred to as the depletion allowance, it excludes 15 percent of your gross income from oil as well as gas wells. That means you have as much as 15 percent of your income tax-free. Make sure you read through the conditions first to know if you qualify for this allowance or not.
Deductible lease costs
Buying lease and mineral rights as well as worrying about lease operating costs and other administrative expenses don’t have to set you back. These are deductible as well.
There are companies that serve as an investment platform, allowing you to join projects that require as little as 1,000 dollars to own a piece of an oil well. If you’re wary about moving forward with your oil investment strategy, this is a good move for you. You can invest the minimum amount required and be good to go. You won’t have to worry about huge risks that could possibly compromise your portfolio, allowing you better security in the process.