Glossary
Boot
Definition
Boot is cash or non-like-kind property received in a 1031 exchange. It is taxable up to the amount of realized gain. Taking on less debt on the replacement property can also create boot.
How boot works
Investors sometimes take boot deliberately to access cash, accepting tax on that part.
Planning debt replacement avoids unintended mortgage boot.
Why it matters to a firm
Boot decisions trade cash against tax, a clear advisory moment.
Calculators that use boot
Questions about boot
Is boot always taxable?
Up to the realized gain.
What is mortgage boot?
Debt relief not replaced on the new property.
Can boot be avoided?
By reinvesting all proceeds and replacing debt.
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Related terms: 1031 exchange
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