1031 Boot Tax Calculator

Calculate boot (taxable portion) in a 1031 like-kind exchange when replacement property is cheaper or you receive cash/debt relief. Methodology and assumptions documented below; sources cited.

The Three Boot Rules

Boot = taxable consideration received in a 1031 exchange. Three sources: (1) cash boot (literal cash at closing), (2) mortgage/debt boot (replacement debt is less than relinquished debt = net relief), (3) personal property boot (any non-real-estate items included in trade). All boots are recognized as gain (taxable) up to the realized gain limit. Excess deferred gain rolls into new basis.

Avoiding Mortgage Boot

If old property had $300k mortgage and new property has only $250k, that $50k debt relief is mortgage boot — taxable. Fix: add $50k cash at closing to top up replacement debt, OR take a larger mortgage on replacement, OR add a personal note for $50k. Many investors miss this — accountant should review BEFORE closing.

Strict 1031 Deadlines

45-day identification window: identify up to 3 replacement properties (or 200% rule) by day 45 after sale. 180-day exchange window: close on replacement by day 180. Missing either kills 1031 status — entire gain becomes taxable. Use a Qualified Intermediary (QI) to hold proceeds — no "constructive receipt" allowed. Fees: $750-1,500 for standard 1031, more for delayed/reverse exchanges.

Last updated May 2026. Sources: IRC §1031, IRS Form 8824.