What Is the "Boot" in a 1031 exchange?

A "boot" in a 1031 exchange refers to any profit or proceeds that are not reinvested in the new property, or that are not “like-kind.” If the new property is worth less than the amount earned from the sale of the current property, then the extra income that is not reinvested is the boot. That extra income is cash and therefore, it is not “like-kind” with the current property.

This type of 1031 exchange is sometimes called a partial 1031 exchange. The extra income, or boot, is not really part of the 1031 exchange and so the taxes paid on that income are not deferred and must be paid when the exchange takes place.