Boot (1031 Exchange)
Boot is anything of value an investor receives in a 1031 exchange that isn't like-kind real estate — most commonly leftover cash, or debt relief when the replacement property carries a smaller mortgage. Boot doesn't disqualify the exchange, but it is taxable up to the amount of the gain.
The two common flavors
Cash boot: sell for $500,000, buy the replacement for $450,000 — the $50,000 that comes back to the investor is taxable. Mortgage boot: pay off a $300,000 loan and take on only a $200,000 loan on the replacement — the $100,000 of debt relief is treated as value received and taxed the same way, a rule that surprises far more investors than the cash version.
How full deferral is preserved
Buy equal or greater in both value and debt (or replace reduced debt with fresh cash), and no boot arises. Partial exchanges are perfectly legal — an investor can deliberately take some cash off the table and pay tax only on that slice while deferring the rest.
Why it comes up in prospecting
Boot is usually the answer to "can I pull some money out when I trade up?" Knowing that the answer is "yes, and only that part is taxed" keeps an exchange conversation alive that a flat "no" would kill. Confirm the math with a CPA — this is a definition, not advice.