1031 Exchange Boot Calculator
Calculate the taxable boot in a §1031 like-kind exchange. Boot = anything received that is not like-kind property. Includes cash boot (cash received) and mortgage boot (debt relief net of new debt assumed). Boot triggers recognition of gain up to the boot amount — your shield against fully deferring is the smaller of realized gain or boot.
Section 1031 in Plain English (Post-TCJA / OBBB)
Since the 2017 Tax Cuts and Jobs Act, §1031 is limited to real property held for investment or business use. Personal-property like-kind exchanges ended Dec 31, 2017. OBBB 2025 preserved §1031 for real property. Exchange must complete within 180 days; replacement properties identified within 45 days. All proceeds must pass through a Qualified Intermediary (QI) — receipt by exchanger of any cash is taxable boot.
Two Types of Boot
Cash boot — actual cash, cash equivalents, or non-like-kind property received. Common cases: relinquished property sells for more than replacement cost; QI returns unused funds; you receive a 'sweetener' from buyer. Mortgage boot — net reduction in debt obligation. Calculated as (debt on relinquished property − debt on replacement property). If you swap a $400K-mortgaged property for a $300K-mortgaged property, you have $100K of mortgage boot. Mortgage boot can be offset by cash you pay in.
Calculating Recognized Gain
Recognized gain (taxable) = lesser of (a) realized gain or (b) total boot. The boot doesn't *create* gain — it *limits* deferral. Example: relinquished property had $200K realized gain, but you received $50K cash boot + $30K mortgage boot. Recognized gain = $80K (the boot). The other $120K is deferred via the replacement property's reduced basis.
Strategies to Eliminate Boot
(1) Trade up — buy replacement property of equal or greater value AND equal or greater debt. (2) Add cash to replace lost debt (cash paid offsets mortgage boot). (3) Use a Delaware Statutory Trust (DST) for the boot portion — preserves like-kind status. (4) Build improvements on replacement property (construction exchange under Rev. Proc. 2000-37). (5) Reverse exchange — buy replacement first, then sell relinquished (also Rev. Proc. 2000-37 safe harbor). Each strategy has §1031 timing strictness.
Sources: IRC §1031, Treas. Reg. §1.1031, Rev. Proc. 2000-37 (reverse exchange safe harbor), IRS Form 8824. Last updated: May 2026. Not tax advice.
Frequently Asked Questions
What triggers boot in a 1031 exchange?
Boot is anything you receive that isn't like-kind real property: cash, debt relief (when new debt < old debt), or non-like-kind property. Receiving boot creates recognized gain up to the boot amount. Total deferral requires zero boot.
Can I add cash to offset mortgage boot?
Yes — cash you contribute to the replacement closing offsets mortgage boot dollar-for-dollar. But cash received cannot be offset by mortgage assumed (asymmetric netting rule in Treas. Reg. §1.1031(d)-2).
What are the 1031 deadlines?
45-day identification period — identify up to 3 replacement properties (or more under 200%/95% rules) by day 45 after sale. 180-day exchange period — close on replacement(s) by day 180. Both deadlines run concurrently; the 180-day deadline is also tied to your tax-return due date including extensions.
Does §1031 still apply to vacation homes?
Only if the vacation home is held primarily for investment or business use (rented at fair-market rent, treated as investment property on Schedule E). Personal-use vacation homes don't qualify. Mixed-use properties get partial §1031 treatment for the investment portion. See Rev. Proc. 2008-16.
What is the carryover basis?
Replacement property's basis = old basis − debt relief + cash paid + new debt + recognized gain. This carries the deferred gain forward — when you sell the replacement (without another exchange), you recognize the deferred gain plus any additional appreciation.