Boot

Boot refers to the non-like-kind property received by the taxpayer in the exchange. When a taxpayer completes a 1031 exchange, they are required to exchange their relinquished property for like-kind property of equal or greater value. If the value of the replacement property is less than the value of the relinquished property, the taxpayer may receive cash or other property in addition to the replacement property. This additional property or cash received by the taxpayer is known as "boot."

Boot is typically subject to capital gains tax and may also be subject to depreciation recapture tax, depending on the circumstances of the exchange. The tax consequences of receiving boot in a 1031 exchange can be complex, and it is important for taxpayers to consult with a qualified tax advisor before completing a 1031 exchange that involves boot.