Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

Chapter 3. Assessment Generally

Article 6. Assessment Roll

Section 607.5

607.5. "Mining rights" or "mineral rights." In the event that a separate assessment of rights and privileges appertaining to mines or minerals and land is made, the descriptive words "mining rights" or "mineral rights" on the assessment roll shall include the right to enter in or upon the land for the exploration, development and production of minerals, including oil, gas, and other hydrocarbons.

History.—Added by Stats. 1955, p. 2057, in effect September 7, 1955.

Generally.—Without evidence of the existence of a reasonably probable market in certain tax years for the sale in separate form of an oil company's rights of surface entry for exploitation of its mineral rights, there was no support for an assessment which included, in an approximate $80 per acre assessment of the mineral rights, $58 per acre as the market value of the rights of surface entry. Union Oil Co. v. Ventura County, 41 Cal.App.3d 432. The conveyance of a mineral interest in land creates two separate estates in the land, each of which is subject to taxation and thus may be separately taxed. If the mineral interest is for so long as minerals can be extracted in paying quantities, the interest is perpetual and is considered to be a fee interest, which is a freehold estate. If the interest is for a term of years, it is considered to be a chattel real, but is nevertheless an estate in land that is subject to taxation separate from the remaining interests. Howard v. Amador County, 220 Cal.App.3d 962.

Valuation.—For property tax purposes, oil and gas leases, which involve income-producing properties, are ordinarily evaluated based on the income capitalization method of appraisal. Dominguez Energy, L.P. v. Los Angeles County, 56 Cal.App.4th 839.