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jessf84
Returning Member

Expenses for mineral royalties on primary home

Purchased a new home in 2020.  We are receiving mineral royalties associated with the land our home is on. I have entered the royalties from our 1099-MISC in turbotax and am looking through the expense section.  It asks about mortgage interest/insurance.  Am I able to use the mortgage interest/insurance we paid on our home loan as an expense related to these royalties?  

2 Replies
ToddL99
Expert Alumni

Expenses for mineral royalties on primary home

Some of the mortgage interest and insurance costs could be allocated as expenses related to these royalties, but you would have to provide solid justification for your method of allocating those costs to the mineral royalties.

 

Typically, the mortgage and insurance costs you are paying are based on your use of the residence, not the presence of minerals on your property.

 

Unless you are paying a higher insurance rate (or paid a higher purchase price for the land/home) because of the mineral operation,  you wouldn't be justified in claiming part of the mortgage or insurance costs as related to the mineral operation. 

 

If you can show a direct relationship between the purchase price of the property (and/or the insurance costs) to the mineral rights income, you could allocate those expenses accordingly.

jessf84
Returning Member

Expenses for mineral royalties on primary home

Thank you!

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