Boot
Certified Financial Planner glossary · Certified Financial Planner
Definition
Cash, non-like-kind property, or net debt relief received in an otherwise tax-deferred exchange; triggers gain recognition.
Boot in plain English
A like-kind exchange is nearly perfect until the client takes $40,000 cash "just to balance the equities." Boot is cash, other non-like-kind property, or net debt relief received in an otherwise tax-deferred exchange, and it triggers recognized gain up to that boot. Mortgage relief net of new debt assumed counts as well. Remaining gain can stay deferred. List every non-qualifying scrap on the stem before you declare the 1031 fully nontaxable. Even a small boot scrap can spoil an otherwise careful exchange.
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