Partial exchanges are allowed — here's the price

1031 Boot Calculator

You don't have to roll over every dollar. Keep some cash, or buy a cheaper property, and the exchange still works — but the part you keep (called "boot") gets taxed now. See exactly what that costs.

The Property You're Selling

The Property You're Buying

Your Tax Rates

The two kinds of boot

  • Cash boot — sale money that ends up in your pocket instead of the new property. Any cash you receive is taxable, period.
  • Mortgage boot — debt you paid off but didn't replace. If your old loan was $300,000 and the new one is $250,000, that $50,000 of debt relief counts as money received — unless you cover the gap with fresh cash from outside the exchange.

Boot is taxed only up to your total profit — you never pay tax on more gain than you actually have. And the taxed portion comes out of your depreciation write-offs first (at the higher recapture rate), which is why a "small" amount of boot can carry a surprisingly large bill.

See all the rules for full deferral →The three requirements that make boot disappear entirely

Common Questions

Is boot always a mistake?

No. Plenty of investors deliberately take some cash out of a sale and accept the tax on that slice while deferring the rest. Boot is a dial, not a failure — the point is to size it on purpose rather than create it by accident.

Can new debt offset cash boot?

No, and this asymmetry trips people up. Adding cash can offset debt relief, but adding debt cannot offset cash you received. Once sale proceeds reach your pocket they are taxable.

Is boot taxed at capital gains rates?

Partly. Recognized gain is treated as depreciation recapture first, taxed at up to 25%, and only the remainder gets long-term capital gains rates. Small boot amounts are often taxed entirely at the higher recapture rate.

Keep Reading

What Is Boot?The concept in plain English, with examples.Partial 1031 ExchangesWhen taking some cash out on purpose makes sense.1031 Exchange CalculatorThe full calculator with your complete sale numbers.