Boot
What you receive that is not like-kind real estate.
1031 Boot Calculator
Boot is the taxable slice of a 1031 exchange: cash you take out, and debt you pay off without replacing. Enter both sides of the exchange to see how much boot you have, how much gain it makes taxable, what that gain is taxed as, and what the tax looks like in one year versus spread on an installment note. Everything runs in your browser.
Built by Hans Goldstein. Enrolled Agent, admitted to practice before the IRS. Last updated .
Your numbers
Gain
Taxable up to the boot; the rest is deferred.
Estimated tax on the boot
Federal, 3.8% net investment income tax and state.
How to calculate boot in a 1031 exchange
A 1031 exchange defers the tax when you trade real estate held for investment or business use for other real estate. Anything else you receive in the trade is boot, and boot is taxable, up to your gain. There are two common kinds.
1. Cash boot
Cash boot is exchange money that does not go into the replacement property: cash you take at closing, money the intermediary releases to you, or exchange funds spent on things that are not transaction costs. Start with your equity after the sale (price, minus selling costs, minus the loan paid off). Subtract the equity the replacement uses (its price, minus the new loan, minus any cash you add). What is left over is cash boot. The calculator does that math unless you uncheck the box and type your own figure.
2. Mortgage boot (debt relief)
When the loan paid off on the old property is larger than the loan on the new one, the difference is treated like cash you received. Under Treasury Regulation 1.1031(d)-2, two things can offset that debt relief: new debt you take on and cash you add from outside the exchange. So mortgage boot is the old loan, minus the new loan, minus cash added, but never less than zero.
The netting only runs one way. Taking a bigger new loan does not cancel cash you take out. Example 2 of that regulation makes the point: new debt offsets debt relief, not cash received. That is why "just borrow more on the new building" does not fix cash boot.
3. Recognized gain, character and basis
- Realized gain is the sale price minus selling costs minus adjusted basis.
- Recognized gain is the lesser of total boot or realized gain. If boot is larger than the gain, only the gain is taxed.
- Character. Section 1245 recapture (cost segregation and bonus depreciation) comes first and is ordinary income. Next is unrecaptured Section 1250 gain from building depreciation, taxed at up to 25%. The rest is long-term capital gain.
- Deferred gain is realized gain minus recognized gain. It carries into the new property.
- Basis of the replacement is its price minus the deferred gain.
A worked example
With the starting numbers above: you sell for $3,000,000 with $150,000 of costs and an $800,000 loan, so your equity is $2,050,000. The $2,400,000 replacement uses a $500,000 loan and $100,000 of your own cash, so it needs $1,800,000 of exchange equity. The $250,000 left over is cash boot. The old loan was $800,000; the new loan and added cash replace $600,000 of it, so mortgage boot is $200,000. Total boot is $450,000. Realized gain is $1,850,000, so all $450,000 is recognized, starting with the $400,000 of building depreciation. The other $1,400,000 is deferred, and the new property's basis is $1,000,000.
Taking boot as cash vs spreading it
Cash boot is taxed in the year of the exchange, stacked on your other income. If you know before closing that some equity will not be reinvested, that part can sometimes be carved out of the exchange and taken as an installment note instead, so the gain is reported as principal arrives (Section 453(f)(6)). The comparison line above runs the same boot through this site's installment engine. Only cash boot can be spread; mortgage boot is received at closing. The carve-out must be written into the contract and escrow instructions before closing and must never pass through the qualified intermediary, or the whole exchange is at risk. Get exchange counsel first.
What this calculator leaves out
It assumes a single relinquished and a single replacement property, both real estate held more than a year, and the tax tables for 2026. It does not model personal property in the trade, the Section 1245(b)(4) rule that can create recapture with no boot when a cost-segregated building is traded for one with fewer Section 1245 parts, partial-year exchanges across tax years, alternative minimum tax, passive loss carryforwards or local taxes. For more, read 1031 boot explained and using an installment sale for 1031 boot, or the book at thewaterfallstrategy.com.
How are the numbers in this 1031 boot calculator figured?
The figures below are the worked example from the explanation above, in the order the calculator computes them. Tax tables are the 2026 federal tables. Checked October 18, 2026.
| Step | Amount | How it is found |
|---|---|---|
| Equity after the sale | $2,050,000 | $3,000,000 price, less $150,000 costs, less $800,000 loan |
| Cash boot | $250,000 | Equity left over after the $1,800,000 the replacement needs |
| Mortgage boot | $200,000 | Old loan of $800,000 less the $600,000 replaced by new loan and added cash |
| Total boot | $450,000 | Cash boot plus mortgage boot |
| Realized gain | $1,850,000 | Price less costs less adjusted basis |
| Recognized gain | $450,000 | Lesser of total boot or realized gain |
| Deferred gain | $1,400,000 | Realized gain less recognized gain |
| Basis of the replacement | $1,000,000 | $2,400,000 price less deferred gain |
Primary sources
1031 boot FAQ
What is boot in a 1031 exchange?
Boot is anything you receive in an exchange that is not like-kind real estate: cash, a note, personal property, or relief from debt that you do not replace. Boot is taxable in the year of the exchange up to the amount of your realized gain. The rest of the gain stays deferred in the replacement property.
How do you calculate boot in a 1031 exchange?
Add cash boot and mortgage boot. Cash boot is exchange equity not reinvested: the sale price minus selling costs and the old loan, minus the equity the replacement uses (its price minus the new loan and any cash you add). Mortgage boot is the old loan minus the new loan minus cash you add, never below zero. Recognized gain is the lesser of total boot or your realized gain.
What is mortgage boot?
Mortgage boot, or debt relief, is the amount by which the loan paid off on the property you sell exceeds the loan on the property you buy, after subtracting any cash you add to the exchange. It is taxed like cash received. You can avoid it by taking on at least as much new debt, adding outside cash, or a mix of both.
Can a larger new mortgage offset cash boot?
No. Under Treasury Regulation 1.1031(d)-2, new debt you take on offsets only the debt you are relieved of. It does not offset cash or other property you receive. Cash you add can offset debt relief, but cash you take out is still boot.
How is boot taxed?
Recognized gain from boot keeps the character of the gain on the property you sold. Section 1245 recapture is ordinary income, unrecaptured Section 1250 gain from building depreciation is taxed at up to 25%, and the rest is long-term capital gain at up to 20%, plus the 3.8% net investment income tax and state tax where it applies. Cash boot is taxed in the year of the exchange unless it is carved out at closing as an installment note.
Keep going
- Installment sale calculator: cash sale vs seller financing vs a structured installment sale.
- Seller financing calculator: the note and the seller's tax by year.
- 1031 boot and depreciation recapture in a 1031 exchange.
Installment sale + 1031 + ILIT: when is it a slam dunk?
For a large estate, a 1031 exchange, an installment sale and a trust-owned life insurance policy (an ILIT) can work together. It tends to win when most of these are true (2026 figures: the federal estate tax exemption is $15,000,000 per person, $30,000,000 for a married couple):
- Your estate is clearly over the line: a projected estate tax bill of $10,000,000 or more.
- You are married, age 50 to 60, in preferred health or better. At 75 or older, single, or in a rated health class it usually does not win.
- One separate property has stuck (suspended) passive losses at least as big as its gain.
- That property earns little: low cap rate, slow growth.
- You would sell or borrow anyway, or you do not have the cash on hand to pay the premiums.
Four or five true? Run the numbers. Enter your own estate and ages below, or open the full calculator. Estimates from published rates, not a quote or advice; your CPA and attorney decide.