Mortgage Boot?

[Andy A.]

I recently did a 1031 exchange. My CPA says I have a mortgage boot situation, but I would like to double check with the experts in this Forum.

Here are the numbers for Relinquished property:

Adjusted Cost Price: $354K

Selling Price (FMV): $431K

Loan Balance: $357K

Here are the numbers for Replacement prop:

Purchase Price (FMV): $441K

Cash paid: $119K ($55K from the relinquished prop sale + $64K additional cash into the deal)

Loan: $331K

My CPA says I have a mortgage boot of $27K, which is the difference in loan amounts of Relinquished and Replacement properties ($357K - $331K).

Is he correct?