Boot
Any non-like-kind value you receive — cash or debt relief — that becomes taxable in the exchange.
Definition
Boot is anything of value you receive in an exchange that is not like-kind real estate. "Cash boot" is leftover proceeds you pocket; "mortgage boot" is debt relief — when the loan on your new property is smaller than the loan on the old one, that difference is treated as if you received cash. Boot doesn’t disqualify the exchange, but it is taxable up to the amount of your gain.
Why it matters
To fully defer tax you generally must reinvest all proceeds AND replace all the debt. Pulling out cash or trading down on a mortgage creates boot. Estimate yours with the boot calculator.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.