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Kiplinger
Kiplinger
Business
Edward E. Fernandez

‘Boot’ in a 1031 Exchange: What It Is and How to Minimize Tax Implications

A new strip mall.

In the context of a 1031 exchange, “boot” refers to the portion of a transaction that doesn’t meet the tax-free criteria and thus becomes subject to immediate capital gains tax. Forms of boot might include cash proceeds, mortgage reduction and non-transaction costs. Although boot won’t disqualify a 1031 exchange, understanding its implications is crucial for optimizing tax benefits and preventing unnecessary liabilities.

Types of boot in 1031 exchanges

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