Sedona, AZ Cost Segregation: Median $66,993 Year-1 Savings (2026)

Why Sedona is different

Sedona is the most architecturally and visually distinctive STR market in the network, and the cost-seg case is shaped by two interacting factors specific to Red Rock Country. The view-premium scarcity dominates basis allocation in iconic red-rock-view sub-markets. Engine outputs for the Chapel area, Red Rock Loop Road, and view-oriented Uptown Sedona properties run 32–38% land allocation, among the highest in the network, comparable to Deer Valley in Park City and Rosemary Beach on 30A. View-premium land scarcity translates to compressed depreciable basis as a percentage of purchase, which compresses reclassification ratio percentages even when absolute dollar deductions remain large.

Arizona's partial decoupling from federal §168(k) is the state-tax wrinkle. AZ has historically required addbacks for federal bonus depreciation on the Arizona Schedule X reconciliation, with the addback amount recovered over the regular MACRS schedule. For 2025+ acquisitions under OBBBA's restored 100% federal bonus, the practical effect is a small AZ-side timing mismatch at the flat 2.5% rate, the dollar impact is modest (1% of accelerated reclassification dollars on a state-side timing-delay basis) but should be modeled into your CPA workflow. The federal benefit at 100% is unaffected.

Property archetype-wise, Sedona is unusual. The market combines: red-rock-view luxury casitas where the view-premium is the dominant value driver; West Sedona SFR with substantial post-2010 STR-furnishing renovation; Village of Oak Creek (Yavapai County jurisdiction with lighter regulation) lower-cost SFR vacation rental product; and Oak Creek Canyon forested-mountain-corridor properties that mix vacation and primary-residence use. The engine treats these sub-markets distinctly, view-premium properties compress reclass percentage; off-view West Sedona and Village of Oak Creek properties produce cleaner reclass-as-percent-of-basis ratios despite lower absolute basis dollars.

Arizona state tax position: Arizona partially decouples from federal §168(k). AZ historically required specific addbacks for federal bonus depreciation, with the addback amount recovered over the regular MACRS schedule for state purposes. For 2025+ acquisitions under OBBBA's 100% federal bonus, the practical effect is that a portion of the accelerated reclassification dollars hit an AZ-side timing mismatch, at AZ's flat 2.5% rate, the absolute dollar impact is small. Federal §168(k) at 100% is unaffected; only the AZ-side acceleration is partially deferred.

Decoupling: Arizona's bonus depreciation conformity has been modified multiple times. Verify current-year treatment with your CPA. The federal deduction is unaffected; only the AZ Schedule X reconciliation is the variable.

Verify with your CPA. State tax conformity rules for federal §168(k) bonus depreciation are adjusted frequently, multiple states have modified their treatment two or more times in the past decade. The general framing on this page reflects our understanding as of May 2026, but you should always verify current-year treatment with a qualified CPA or tax attorney before relying on specific dollar projections for your situation.

Engine outputs: 5 Sedona fixtures

These aren't rough estimates. Each fixture was run through the same engine that produces your actual study, RSMeans 2026 base costs, BLS PPI time index, county assessor land allocation, IRS Pub. 946 / Rev. Proc. 87-56 MACRS classification, 100% bonus depreciation per OBBBA.