1031 Boot Calculator
Relinquished property
The property you are selling.
Replacement property
The property you are buying.
Your tax picture
Boot stacks on top of your other income, so these two fields move the answer more than anything else on the page.
About this calculator
Free, instant, and backed by a CPA-led qualified intermediary — built for investors who need to know what a partial exchange really costs.
Free, instant, CPA-led QI
The tool is free, runs in your browser, and stores nothing you enter. Behind it is Universal Pacific, a qualified intermediary led by a CPA. When you sell and reinvest, we hold your exchange funds, prepare the documents, and keep your 45- and 180-day deadlines on the calendar so nothing slips.
What the calculator tells you
Enter both sides of the trade and get your cash boot, your mortgage boot, the gain you must recognize, the gain you keep deferred, and the basis you carry into the replacement property. Then it estimates federal tax, the 3.8% Net Investment Income Tax, and California tax on the recognized amount.
It runs the Schedule D stacking sequence rather than multiplying buckets by flat rates, so the recapture layer fills your ordinary brackets before anything hits the 25% ceiling.
How boot works in a 1031 exchange
Four things that decide what you owe — including the netting rule most free calculators get backwards.
What counts as boot
IRC §1031(a)(1) defers tax only where you exchange real property solely for like-kind real property. Anything else you walk away with falls outside the shelter, and that leftover is boot. It does not break your exchange; it carves a taxable slice out of it.
Under §1031(b) you recognize the lesser of your realized gain or the boot received. Realized gain of $728,000 against $228,000 of boot means you report $228,000 and defer $500,000. Boot larger than your gain does not create extra gain. And §1031(c) blocks the mirror image: an exchange at a loss recognizes nothing, boot or no boot. Our guide to boot in a 1031 exchange covers the structuring choices that keep it near zero.
Cash boot and mortgage boot
Cash boot is money you can see: proceeds you take at the closing table, funds your intermediary returns because you did not spend them, and the fair market value of any non-like-kind property you receive.
Mortgage boot is money you never touch. Treas. Reg. §1.1031(d)-2 opens by saying liabilities the other party assumes are "to be treated as money received by the taxpayer." Pay off a $500,000 loan and take a $300,000 loan, and the $200,000 gap is treated as cash in your pocket. That is why trading down produces a bill nobody budgeted for. Load the example scenario above: the seller pockets $50,000 and owes roughly $81,800, because $178,000 of the boot is debt relief that never arrived as a wire.
The asymmetry: it runs one direction only
Cash you pay in offsets debt relief. Debt you take on does not offset cash you received. That is not folklore. Treas. Reg. §1.1031(d)-2, Example 2(c) says it in one sentence: "consideration received in the form of cash or other property is not offset by consideration given in the form of an assumption of liabilities or a receipt of property subject to a liability, consideration given in the form of cash or other property is offset against consideration received in the form of an assumption of liabilities."
The IRS runs the same example on Form 8824. Taylor sheds an $80,000 mortgage, assumes a $150,000 mortgage — $70,000 more debt than before — and takes $40,000 in cash. The instructions say Taylor enters $40,000 on line 15, full stop. All that extra borrowing bought no shelter. At your closing table it means bringing outside cash is a real lever and borrowing more is not.
Boot is taxed at recapture rates first
Recognized gain is not one lump at 15%. It is characterized in a fixed order and the expensive buckets fill first: §1245 recapture at ordinary rates, then §1250 ordinary recapture (zero for property placed in service after 1986, since MACRS forces straight line), then unrecaptured §1250 gain at a 25% maximum, and only then 0/15/20%. IRC §1(h)(3) carves the 25% bucket out of the 15% bucket by definition, so there is no ordering election.
Follow it through: if your boot is smaller than your accumulated depreciation, all of it sits in the 25% bucket and nothing reaches 15%. A calculator applying 15% to $228,000 of boot reports about $34,200 of federal tax where the figure is closer to $53,800. See depreciation recapture in a 1031 exchange for what happens to that deferred depreciation across a chain of exchanges.
The cost-segregation blindside
If the property you are selling had a cost segregation study, read this twice. IRC §1245(b)(4) caps ordinary recapture at recognized gain plus the fair market value of non-§1245 property you acquired. That second prong means §1245 recapture is not limited to your boot.
Pub. 544 works an example where the taxpayer recognizes zero gain on the exchange and still reports $10,000 of ordinary income recapture. A "fully deferred" exchange can still produce an ordinary tax bill. The calculator flags it whenever you enter §1245 depreciation in Expert mode. It does not try to compute the figure, because the answer depends on what the replacement property is made of.
What reduces boot, and what only looks like it does
Exchange expenses reduce boot first and add to basis with the excess, so they are never lost and never double-counted. Form 8824 line 15 reduces boot "but not below zero" by exchange expenses; line 18 picks up the remainder on the basis side. The line-item definition lives in Pub. 544 and Pub. 551, not the Form 8824 instructions, and that language only appeared in the 2024 editions, so plenty of published material still reflects an older posture.
Three honest caveats. Intermediary fees sit on the "reduces boot" list with no ruling, regulation or publication naming them — universal practice, but practice is not law. Prorations, security deposits and repair credits are unsettled: the IRS position says they are not exchange expenses, no case decides it, and Treas. Reg. §1.1031(k)-1(g)(7)(ii) points the other way on prorated taxes. Loan costs attach to the debt, not the property. Fund all of these with outside cash and the questions never come up. For the full picture, see our breakdown of 1031 exchange costs.
Your deadlines and the identification rules
Strict calendar days, counted from the day you transfer the relinquished property.
Identification
Treas. Reg. §1.1031(k)-1(b)(2)(i) ends the identification period at midnight on the 45th day after you transfer the relinquished property. We count calendar days with no weekend or holiday rollover, because the regulation carries no business-day language and no ruling or case has ever held that IRC §7503 pushes the date forward.
Or your return due date
The exchange period ends at midnight on the earlier of the 180th day or the due date of your return for the year of the transfer, extensions included. Close in November and your 180 days quietly shrink to April 15 unless you file an extension. The calculator flags it in Expert mode when the return date binds. Timing pressure on the buy side is often better solved with a reverse 1031 exchange.
Identification rules
Identify up to three properties at any value, or any number whose combined value stays at or under 200% of what you sold. The 95% rule is a rescue, not a third option: break the first two and you are "treated as if no replacement property had been identified" unless you actually close on 95% of everything you listed. Most published content presents it as a planning choice, which invites people to identify ten properties thinking they have cover. They do not.
How it works
Five steps from your closing statement to a number you can act on.
Enter the sale side
Sale price, original cost, improvements, depreciation, the mortgage being paid off, and your exchange expenses.
Enter the buy side
Replacement price, the new loan, and any cash you are adding from outside the exchange.
Add your tax picture
Filing status and other taxable income. Boot stacks on top of your income, so both matter.
Read the split
See cash boot, mortgage boot, recognized gain, deferred gain, and the rate each layer is taxed at.
Close the gap
Adjust the buy side before closing. Adding cash or buying up cuts boot; borrowing more does not.
Frequently asked questions
The questions investors ask most about boot in a 1031 exchange.
What is boot in a 1031 exchange?
Boot is anything you receive in a 1031 exchange that is not like-kind real property: cash at closing, unspent exchange proceeds, non-like-kind property, or net relief from debt. Under IRC §1031(b) you recognize gain equal to the lesser of your realized gain or the boot received, and the rest of the gain stays deferred. Receiving boot does not disqualify the exchange; it makes part of it taxable.
Is there a minimum amount of boot before it becomes taxable?
No. There is no de minimis exception in federal law, so one dollar of boot is one dollar of recognized gain, capped at your realized gain. The $1,500 figure that circulates is a California withholding threshold on FTB Form 593 and has nothing to do with federal recognition. Below $1,500 of boot your intermediary does not withhold, but you still report the gain.
Can I take on a bigger mortgage to cancel out cash I received?
No, and this is the most expensive misunderstanding in the area. New debt offsets debt relief, never cash. Treas. Reg. §1.1031(d)-2 Example 2 and the Form 8824 instructions both show a taxpayer taking on $70,000 more debt than they shed and still recognizing the full $40,000 of cash boot. Bringing outside cash works in the other direction, though: it reduces mortgage boot dollar for dollar, and the calculator shows exactly how much of it landed.
What rate does boot get taxed at?
It depends on what created your gain, and the expensive buckets fill first. Section 1245 recapture from cost-segregated components goes at ordinary rates with no cap. Then unrecaptured section 1250 gain at a 25% maximum. Only what is left reaches 0/15/20%. If your boot is less than your accumulated depreciation, all of it sits in the 25% bucket. Passive investors add the 3.8% Net Investment Income Tax, and California taxes the whole amount as ordinary income with no preferential rate.
The 25% figure is a ceiling rather than a flat rate. Recapture stacks on top of your ordinary income and fills your 10%, 12%, 22% and 24% brackets first, so a mid-income seller can pay well under 25% on that layer.
Does a 1031 exchange defer the Net Investment Income Tax?
Yes. IRC §1411(c)(1)(A)(iii) counts gain only "to the extent taken into account in computing taxable income," and section 1031 keeps deferred gain out of taxable income. Treas. Reg. §1.1411-4(d)(3)(ii) Example 4 confirms it with a worked example. Recognized boot is a different story: it does enter taxable income, so it is net investment income in the exchange year and the 3.8% applies.
Do exchange expenses reduce boot?
Commissions, title and escrow fees, transfer taxes, recording fees, deed preparation and exchange-related legal fees reduce boot first, with any excess added to the basis of the replacement property. Loan charges do not, because they attach to the debt rather than the property. Prorations, security deposits and repair credits are unsettled: the IRS position in Pub. 544 and Pub. 551 says they are not exchange expenses, but no ruling or case decides it. Funding those items with outside cash removes the question entirely.
Can I owe tax on an exchange with zero boot?
Yes, in one specific situation. IRC §1245(b)(4)(B) caps ordinary recapture at recognized gain plus the fair market value of non-section 1245 property received, not at recognized gain alone. Pub. 544 works an example with zero recognized gain and $10,000 of ordinary recapture. If the property you are selling had a cost segregation study and your replacement property has no comparable components, get a CPA on it before you close.
What happens if my exchange produces a loss?
IRC §1031(c) does not let you recognize it, boot or no boot. The loss rolls into the basis of the replacement property. If you are sitting on a real economic loss, an exchange may not be the right structure at all, since a taxable sale that lets you use the loss can be worth more than deferral. That is a conversation worth having before you sign the exchange agreement, not after.
Does California treat boot differently?
California conforms to section 1031 for real property and has no preferential capital gains rate, so recognized boot is taxed as ordinary income at rates up to 12.3%, plus the 1% Behavioral Health Services Tax above $1 million of taxable income. If you receive more than $1,500 of boot on a California property, your intermediary withholds under R&TC §18662, which is a prepayment against your bill rather than an extra tax. And if you exchange California property for property in another state, you must file FTB Form 3840 every year until the deferred gain is recognized, regardless of where you live by then.
Have boot you did not plan for?
Most boot is fixable before closing, and the fixes are simple once you can see which side of the trade is causing it. Send us the settlement statement and the replacement terms. Universal Pacific sets up the exchange, holds the funds, and tracks every deadline with you.
Contact our team