Can You Use a 1031 Exchange to Purchase Property in Big Sky, Montana?

Big Sky, Montana continues to attract buyers from across the country seeking luxury homes, elevated mountain living, and long-term property ownership in one of the West’s most desirable alpine destinations. If you’re planning to sell a property and considering a 1031 exchange, the good news is—yes, you should be able to use it to purchase qualifying real estate in Big Sky.

Not sure on how this process works? We are more than happy to connect you with 1031 specialists that will work with you directly on the 1031 process. We'll help you find the real estate!

Whether you’re looking at ski-in/ski-out homes in Moonlight Basin, custom builds in Spanish Peaks Mountain Club, or scenic river retreats on the Gallatin, a 1031 exchange can be a smart way to transition your property portfolio into Big Sky’s thriving luxury market.

What Is a 1031 Exchange?

A 1031 exchange, named after Section 1031 of the IRS tax code, allows you to defer capital gains taxes on the sale of a property—so long as you purchase another qualifying property of equal or greater value. The replacement property must be held for business or income-producing purposes (such as a luxury rental home), not personal use alone.

Can You Purchase a Big Sky Property with a 1031 Exchange?

Yes—as long as the property meets the IRS’s use requirements and you abide by all of the strict rules and timelines, Big Sky properties can qualify under the 1031 exchange rules. This includes luxury mountain properties used for short-term rentals, long-term leases, or held with the intent of future income potential.

Note: Homes used solely for personal enjoyment, such as vacation-only residences with no rental activity, generally do not qualify.

Why 1031 Buyers Are Drawn to Big Sky

1. Limited Inventory in a Premier Market

Big Sky is not a volume market. Luxury properties here are rare, tightly held, and often in high demand. For buyers looking to roll proceeds into a high-value asset, Big Sky’s premium neighborhoods offer strong long-term appeal.

2. Lifestyle-Driven Ownership

Big Sky is more than just a market—it’s a lifestyle. Properties here offer proximity to world-class skiing, private golf clubs, hiking trails, fly fishing, and panoramic views. Buyers seeking a refined mountain home in a low-density, high-amenity setting find that Big Sky delivers.

3. Established Rental Demand

Many luxury properties in Big Sky are eligible for short-term rental, offering flexibility and cash flow for buyers who choose to rent the home when they aren’t using it. This added versatility is a major draw for 1031 exchange scenarios.

Timing and Guidelines to Know

As with all 1031 exchanges, timing is critical. You have 45 days to identify potential replacement properties and 180 days to complete the purchase after selling your original property. All transactions must go through a qualified intermediary. Additionally, the new property must be held for rental or income-generating use—not solely personal enjoyment.

It’s essential to work with a real estate professional who understands both the technical aspects of 1031 exchanges and the nuances of Big Sky’s luxury real estate landscape.

Final Thoughts

From the high-alpine beauty of Moonlight Basin to the elevated elegance of Spanish Peaks, Big Sky offers exceptional opportunities for buyers looking to shift from one luxury property to another through a 1031 exchange. With breathtaking views, strong rental demand, and exclusive neighborhoods, Big Sky continues to stand out as a premier mountain destination.

Considering a 1031 Exchange in Big Sky?

Work with Mia Lennon, a trusted real estate expert at The Big Sky Real Estate Co. Mia has helped buyers navigate the intricacies of 1031 exchanges while identifying exceptional properties across Big Sky’s most coveted communities. If you’re planning a move, she’ll help you align your timing, identify the right property, and make the process seamless.

Contact Mia Lennon today to learn more about Big Sky’s luxury real estate market.