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Boot Calculator
By Priya Raman, policy and tax writer
An exchange can fail to defer perfectly in two separate ways: cash you keep, and debt you shed. This tool prices each one and adds them up.
An exchange can fail to defer perfectly in two separate ways: cash you keep, and debt you shed. This tool prices each one and adds them up.
Boot is priced dollar for dollar here; whether it's taxed depends on your gain.
| Boot type | How it's measured here |
|---|---|
| Cash boot | Net proceeds minus cash reinvested |
| Mortgage boot | Old mortgage paid off minus new mortgage taken on |
Yes. Any sale proceeds you keep instead of routing into the replacement purchase show up as cash boot in this calculator, dollar for dollar.
Yes, that gap is mortgage boot. The IRS treats debt you were relieved of as value received, even if not one dollar passed through your hands.
No. Boot is only taxable up to the size of your realized gain. A property sold at a loss produces boot with nothing to tax it against.
Yes. Adding cash to make up for a smaller replacement loan offsets debt-relief boot, which is exactly what the reinvested-cash field in this calculator is checking against your old mortgage.
No, it isolates the dollar amount only. For the rate that applies once boot is known, use the capital gains tax calculator or the full 1031 exchange calculator.
A textbook exchange reinvests every dollar of proceeds and carries debt equal to or greater than what was paid off. Boot is the gap between that ideal and what actually happened: cash pulled out, or a smaller loan taken on. Neither one voids the exchange. Both just get taxed now instead of later, up to the size of the gain.
Once you know the boot amount, run it through the capital gains tax calculator for the rate, or the 1031 exchange calculator for the full picture including recapture.