Sedona STR Tax Savings Estimator

If you’re considering a Sedona short term rental as a tax strategy, the question every buyer asks first is the same one: how much can this actually save me?

The estimator below gives you a directional answer in about 30 seconds. Enter your purchase price, your tax bracket, and your filing status. We’ll show you an estimated range of first year tax savings based on the strategy described in our bonus depreciation article.

This is an estimator, not a calculator. Real outcomes depend on your specific cost segregation results, your income mix, your state of residence, your level of material participation, and a dozen other factors. Use this to decide whether a longer conversation is worth your time. Then have that conversation with a CPA.

How this estimator works

The math behind the tool is the same math that's running in cost segregation studies all over the country. Here's the simplified version:

1. Purchase price minus land. Land isn't depreciable, so we exclude roughly 15% of the purchase price as land value (a Sedona average for single family residential).
2. Cost segregation reclassifies a portion of the building. A quality study typically identifies 20% to 40% of the building basis as 5, 7, or 15 year property (appliances, fixtures, finishes, landscaping, certain HVAC components, etc.). We show the full 20% to 40% range.
3. Bonus depreciation deducts that portion in year one. Under the One Big Beautiful Bill (signed July 4, 2025) and IRS Notice 2026-11, qualifying property acquired after January 19, 2025 is eligible for 100% bonus depreciation.
4. The remaining basis depreciates normally over 39 years. We add that first year amount to the total deduction.
5. Multiply by your tax bracket. If the property qualifies for the STR loophole (under 7 day average stay + material participation), those losses are non-passive and can offset W-2 income. Tax savings = total year one deduction multiplied by your bracket.

What this estimator does NOT account for

To be fully transparent, here's what's outside the scope of this tool:

• State income tax. Many states allow some form of bonus depreciation, but rules vary. If you live in Arizona (no state-level decoupling), savings are higher. If you live in California or another decoupling state, savings on the federal side still apply but state savings may not.
• Net Investment Income Tax (NIIT). The 3.8% NIIT can stack on top of regular tax for high earners.
• Material participation risk. If you don't meet the 100 hour test, your losses stay passive and the strategy doesn't work.
• Recapture at sale. When you eventually sell the property, depreciation gets recaptured at up to 25%. This isn't a loss, it's a deferral. A 1031 exchange can defer it further.
• Passive activity loss limitations if the STR loophole criteria aren't satisfied.
• Cost segregation study cost ($5K-$15K, paid out of pocket).

None of these are deal breakers, but they're real factors in your actual outcome. A good CPA will model all of them.

What to do next

If the number you saw above is meaningful to you, the next step is a conversation, not a purchase. In order:

1. Talk to a CPA who knows real estate. Not all CPAs do. If you don't have one, I can refer you to a few who specialize in STR tax strategy.
2. Get a property analysis. Not every Sedona property is a good fit for this strategy. HOA rules, zoning, current rental performance, and the math on actual nightly rates all matter. This is where I come in.
3. Move quickly if it makes sense. Bonus depreciation is permanent under current law, but inventory in Sedona's STR-friendly neighborhoods is finite. The buyers paying attention right now are getting first pick.

If you want to talk through a specific property or just get the lay of the land, schedule a call below or send me a note. I'll tell you honestly whether what you're considering makes sense, and connect you with the right CPA and cost segregation firm if you don't have them already.

Important disclosure. William Hamburg is an Associate Broker, not a tax professional. Nothing in this tool or article is tax, legal, or financial advice. The estimator outputs are illustrative ranges based on simplifying assumptions, not promises or projections. Actual tax outcomes depend on your specific income, filing status, state of residence, the specifics of your property, the results of your cost segregation study, your level of material participation, and many other factors. The 100% bonus depreciation provisions discussed are based on the One Big Beautiful Bill Act (signed July 4, 2025) and IRS Notice 2026-11. Tax law can change. Audit risk exists for any tax position. Consult a qualified CPA or tax attorney before making any real estate investment decision based on tax considerations.