1031 Exchange and Boot
What is a "Boot?"
-Boot is any non-like-kind real property received by the taxpayer and is taxable to the extent there is a capital gain.
-Two kinds of "boot"
-"Cash boot" is the receipt of exchange proceeds by the taxpayer
-"Mortgage boot," sometimes referred to as "debt relief," is the taxpayer having less debt on the replacement property or properties than they had on their relinquished property.
IF THESE GUIDELINES ARE NOT EXECUTED CORRECTLY, THE 1031 TRANSACTION MAY INCUR WHAT IS KNOWN AS "BOOT".

HOW TO AVOID "BOOT" IN A 1031 EXCHANGE
The common objective in a 1031 exchange is disposing of a property containing significant realized gain and acquiring a like-kind replacement property so there is no, or little, recognized gain. In order to defer all capital gain taxes, a taxpayer must balance the exchange by the following guidelines:
Avoid "boot" with a Delaware Statutory Trust (DST)
Example:
Sale price of Relinquished Property: $1,000,000
Replacement Property #1: $800,000 like-kind investment property (self managed)
Replacement Property #2: $100,000 investment property owned by DST
Replacement Property #3: $100,000 investment property owned by DST
Result: Using a DST brought the value of all replacement properties to $1.0 million, providing full capital gain deferral to the investor.