What is “boot” in connection with a 1031 Deferred Exchange?
“Boot” is an English term referring to funds or property necessary to even out an exchange. Boot is property that is not “like-kind” as to other property acquired in an exchange transaction. Boot Receipt = Gain Recognition An Exchange Party who receives boot in an exchange transaction generally recognizes gain to the extent of the value of boot received. Some common examples of boot are: • Cash proceeds an Exchange Party receives from the Qualified Intermediary; • Proceeds taken from the exchange in the form of a note or contract for sale of the property; • Relief from debt on the Relinquished Property caused by the assumption of a mortgage, trust deed, contract, or an agreement to pay other debt; • Personal property received that is not “like-kind.” Personal property is never “like-kind” to real property, and it must match very closely in order to be “like-kind” to other personal property exchanged.
