valuation
boot
In a 1031 like-kind exchange, boot is any cash or non-like-kind property received in the exchange, including debt relief when the replacement property carries a smaller mortgage than the relinquished property. Receiving boot does not disqualify the exchange, but the boot is taxable as gain in the year of the exchange, up to the amount of the realized gain.
- Exam tip
- Boot is the taxable part of an otherwise tax-deferred exchange. Mortgage relief counts as boot, which exams often test.
- Example
- An investor exchanges a $600,000 building for a $550,000 building and receives $50,000 in cash; the $50,000 is boot and is taxable.
Related terms & state variants
Sources
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Last verified: 2026-10-23