How boot works
The two ways gain leaks out of an exchange
A 1031 exchange defers gain only to the extent your value stays in like-kind real estate. Anything that comes back to you in another form is boot, and boot is taxable in the year of the exchange. Cash boot is the obvious kind. Mortgage boot is the one that surprises people: pay off a $750,000 loan, take a $600,000 loan on the replacement, and the $150,000 of debt relief is taxable unless you cover it with fresh cash at close.
The default numbers above show a deliberate partial exchange: $100,000 pulled from the qualified intermediary as cash boot while the remaining gain stays deferred. Set cash removed back to zero and keep debt equal-or-up, and the boot line drops to zero. Note that boot is capped at your realized gain, which is why the calculator asks for your adjusted basis.
For the full picture including your estimated federal tax deferred, use the full 1031 exchange calculator. And if boot is forcing your hand because you cannot find a big enough replacement, browse off-market inventory before you settle for buying down.
Need a bigger replacement to avoid boot?
Post My ExchangeFAQ
Frequently asked questions
Q1What is cash boot?
Cash boot is exchange cash that ends up in your pocket instead of the replacement property: money you pull out of the qualified intermediary on purpose, or QI funds left unspent when the replacement closes. It is taxable in full, up to your realized gain.
Q2What is mortgage boot?
Mortgage boot is debt relief. If the loan on your replacement property is smaller than the loan you paid off on the relinquished property, the IRS treats the difference as if you received cash. You can offset it dollar for dollar with additional out-of-pocket cash invested in the replacement.
Q3How do I avoid boot entirely?
Follow the equal-or-up rule: buy replacement property priced at or above your net sale price, carry equal or greater debt, and reinvest every dollar the qualified intermediary holds. If all three hold, the calculator shows zero boot.
Q4Is taking some boot always a mistake?
No. A partial exchange is legal and sometimes intentional, for example pulling out cash for reserves and paying tax on just that slice while the rest of the gain stays deferred. The mistake is accidental boot, usually from a debt shortfall nobody modeled before close.
More 1031 tools
Keep planning your exchange
1031 exchange calculator
The full deferral model: capital gain, taxable boot, and estimated federal tax deferred.
45/180-day deadline calculator
Your exact identification and closing dates from the day your sale closes.
Depreciation recapture calculator
The 25% recapture bill on a taxable sale, and what a 1031 exchange defers.
This calculator is for planning, not tax advice. Boot netting has edge cases; confirm your numbers with a CPA before close.