1031 Exchange Boot Calculator 2026 β Taxable Boot & Recapture
Calculate taxable boot in a 1031 exchange. Determine cash boot, mortgage boot, depreciation recapture (Section 1245/1250), and recognized vs deferred gain.
Relinquished Property
$
Fair market value at time of sale $
Original cost + improvements β depreciation taken $
Loan balance paid off when you sold $
Total depreciation deducted over holding period Replacement Property
$
$
New loan on replacement property $
Cash you received (not reinvested) %
For Sec 1245 recapture (Sec 1250 capped at 25%) $0
Total Boot
$0
Recognized Gain
$0
Recapture Tax (Ordinary)
$0
Deferred Gain
Boot & Gain Breakdown
Tax Due Now vs Deferred
| Component | Amount | Rate | Tax |
|---|
How to Calculate 1031 Exchange Boot
Boot is the taxable portion of a 1031 exchange β any value received that is not like-kind property. The IRS taxes boot up to the amount of your realized gain. Depreciation recapture is always taxed first (at ordinary rates for Section 1245 or capped at 25% for Section 1250 real property) before any capital gains rate applies to remaining boot.
The Formula
Realized Gain = FMV Relinquished β Adjusted Basis
Mortgage Boot = Mortgage Relieved β Mortgage Assumed (if positive)
Total Boot = Cash Boot Received + Mortgage Boot
Recognized Gain = MIN(Total Boot, Realized Gain)
Recapture Portion = MIN(Recognized Gain, Depreciation Taken)
Capital Gain Portion = Recognized Gain β Recapture Portion
Deferred Gain = Realized Gain β Recognized Gain
Mortgage Boot = Mortgage Relieved β Mortgage Assumed (if positive)
Total Boot = Cash Boot Received + Mortgage Boot
Recognized Gain = MIN(Total Boot, Realized Gain)
Recapture Portion = MIN(Recognized Gain, Depreciation Taken)
Capital Gain Portion = Recognized Gain β Recapture Portion
Deferred Gain = Realized Gain β Recognized Gain
Example
Sold property for $900K, basis $350K, old mortgage $300K, new mortgage $400K, depreciation $80K:
Realized gain: $900K β $350K = $550,000
Mortgage boot: $300K β $400K = β$100K (negative = no mortgage boot, you increased debt)
Total boot: $0 (debt increased, no cash boot)
Recognized gain: $0 β full deferral
Deferred: $550,000 (including $80K recapture deferred)
Realized gain: $900K β $350K = $550,000
Mortgage boot: $300K β $400K = β$100K (negative = no mortgage boot, you increased debt)
Total boot: $0 (debt increased, no cash boot)
Recognized gain: $0 β full deferral
Deferred: $550,000 (including $80K recapture deferred)
Sources and References (click to expand)
- IRS Publication 544 β Sales and Other Dispositions of Assets
- IRC Section 1031 β Exchange of Real Property Held for Productive Use or Investment
- Treasury Reg 1.1031(j)-1 β Exchanges of Multiple Properties
- IRS Form 8824 Instructions β Like-Kind Exchanges
- IRC Section 1245 β Gain from Dispositions of Certain Depreciable Property
- IRC Section 1250 β Gain from Dispositions of Certain Depreciable Realty
Extended
Multi-Property Exchange Boot Allocator
Allocate boot across multiple relinquished properties β per-property recapture, SVG stacked bar chart, recognized vs deferred table
Add multiple relinquished properties. Boot is allocated and recognized gain is calculated per property. All rates: 25% recapture (Sec 1250), 15% LTCG.
Recognized vs Deferred Gain by Property
| Property | Realized Gain | Boot | Recapture Tax | LTCG Tax | Deferred Gain |
|---|
Frequently Asked Questions
What is "boot" in a 1031 exchange?
Boot is any non-like-kind property received in a 1031 exchange. It includes cash boot (cash you receive or keep from the sale proceeds) and mortgage boot (net debt relief when the mortgage paid off on the relinquished property exceeds the new mortgage assumed on the replacement property). Boot is taxable up to the amount of your realized gain.
How is mortgage boot calculated?
Mortgage boot equals the mortgage relieved (paid off on old property) minus the mortgage assumed on the new property. If you had a $300K mortgage on your old property and only took a $200K mortgage on the new one, you have $100K of mortgage boot. You can offset mortgage boot by adding cash to the deal.
What is depreciation recapture and how does it interact with boot?
Depreciation recapture is taxed first and at ordinary income rates (capped at 25% for Section 1250 real property). When boot is triggered, recapture is taxed before capital gains. For personal property (Section 1245), recapture is taxed at your full ordinary rate. Only the excess of boot over recapture is taxed as capital gains.
Can I avoid boot by adding more cash to the replacement purchase?
Yes. Additional cash invested in the replacement property offsets mortgage boot dollar-for-dollar. For example, if you have $50K of mortgage boot, bringing $50K extra cash to closing eliminates the boot and preserves the full tax deferral. This is called "equitizing" the exchange.
What is the recognized gain in a 1031 exchange with boot?
Recognized gain is the lesser of (1) total boot received or (2) realized gain. You can never recognize more gain than you actually earned. If your realized gain is $200K and you receive $300K of boot, you only recognize $200K. The boot in excess of gain is not taxable (it represents return of basis).