Cost Segregation in Phoenix
The Phoenix metro area — including Scottsdale, Tempe, Mesa, and Chandler — is one of the fastest-growing Airbnb markets in the country. Winter snowbird demand, spring training baseball, golf tourism, and a growing corporate event scene create reliable STR revenue from October through April, with summer rates dropping but never disappearing thanks to the pool-party and resort crowd.
One factor that makes Phoenix particularly favorable for cost segregation: relatively low land-to-building ratios compared to coastal markets. When land represents a smaller share of the purchase price, more of your investment sits in the depreciable building — and more of that building can be reclassified into shorter MACRS classes. A $500K Phoenix Airbnb typically yields $136K+ in accelerated depreciation.
Arizona has a flat 2.5% state income tax (one of the lowest in the country), so Phoenix STR investors capture nearly all of the cost segregation benefit at the federal level. Combined with 100% bonus depreciation, a materially-participating Airbnb host in the 37% bracket can generate $50K+ in real tax savings in year one — money that often gets reinvested into a second property.
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