Watch this quick tutorial for more information about taxable Boot in a 1031 Exchange.
Having nothing at all to do with footwear, “Boot” is commonly used in discussing the tax consequences of a 1031 Exchange.
It is defined as the money or fair market value of the non-qualified property received in an exchange.
Any Boot received is taxable to the extent of gain realized on the exchange.
While the receipt of Boot will not disqualify the exchange, for a 1031 Exchange to be completely tax-free, a taxpayer must not receive Boot.
If you have further questions, please reach out to us, or access our Knowledge Center on our website for more information on how to avoid the receipt of boot.