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.
- What Is a 1031 Exchange?
- How Do I Complete a 1031 Exchange Application?
- How Do I Choose a Qualified Intermediary for a 1031 Exchange?
- What Type of Property Can I Swap in a 1031 Exchange?
- What Are Some Advantages Provided by a 1031 Exchange?
- What Is the Timeline for a 1031 Exchange Application?
- How Can I Use a 1031 Exchange to Stop Managing Property?
- How Can I Take Advantage of a 1031 Exchange?
- How Long Do I Have to Complete a 1031 Exchange?
- What Is "Like-Kind" Property in a 1031 Exchange?
- How Do I Fully Defer the Tax on the Sale of My Property through a 1031 Exchange?
- What Is a Delayed 1031 Exchange?
- What Is a Reverse 1031 Exchange?
- Do I Need an Intermediary for a 1031 Exchange?