Realized 1031 Glossary of Terms

Boot

Written by The Realized Team | Jun 20, 2022 5:00:00 AM

Boot, although not specifically defined (or even mentioned) in IRC Section 1031, is commonly used and refers to the fair market value of cash, benefit or other non “like-kind” property received by the taxpayer in an exchange of a capital asset which is subject to capital gains tax.

For example, if an investor generated $500,000 of net proceeds from the sale of their relinquished property, but only reinvested $450,000, the $50,000 of retained proceeds would be considered boot and subject to capital gains and depreciation recapture taxes.