Definition
Taxable consideration received in a 1031 exchange, such as cash, debt relief, or personal property that doesn't qualify as like-kind.
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Boot is any money, personal property, or debt relief received in excess of the exchanged property value. Receiving boot triggers taxes on the gain to the extent of the boot received, but still allows deferral of the remaining gain. To fully defer taxes, the replacement property must equal or exceed the relinquished property value, and you can't receive cash or other boot. Boot can include debt relief if the new mortgage is lower than the old mortgage.
Pro Tip
Structure exchanges to minimize boot received to defer maximum capital gains taxes.
Example
An investor exchanged property worth $400,000 for property worth $450,000, receiving no boot and deferring all capital gains taxes.