What Is Taxable Boot in a 1031 Tax Deferred Exchange?

The term taxable boot refers to any non-like kind property received in a 1031 Tax Deferred Exchange.  For example, if you are selling real estate that was held for rental, investment or use in a business, then non-like kind property would be any type of property that is not real estate held for rental, investment or use in a business.

The term cash boot refers to the receipt of cash.  In other words, you end up with cash left over after you have completed the acquisition of your replacement properties in your 1031 Tax Deferred Exchange. 

The term mortgage boot (also called debt relief or mortgage relief) means that the taxpayer has traded down in the value of replacement properties acquired and therefore has less debt on the replacement properties than what he or she had on the relinquished properties even though he or she reinvested all of his or her cash equity.