What Is 'Boot' in a 1031 Exchange?
The taxable leftover that catches many exchangers off guard.
Definition
Boot is any value you receive in an exchange that isn't like-kind property. It's generally taxable up to the amount of your gain.
Cash boot
Proceeds you don't reinvest, including funds used for certain non-transaction costs at closing.
Mortgage boot
If you pay off more debt on the sale than you take on in the purchase, the difference can be treated as boot unless you offset it with additional cash.
How DSTs can help
DSTs come in many sizes and leverage levels, so investors can often fine-tune their allocation to match their equity and debt replacement needs precisely.
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Schedule a Strategy CallEducational information only; not tax, legal, or investment advice. DSTs involve risk, including loss of principal, and are available only to accredited investors. Consult your own advisors.