Use Bonus Depreciation Short-Term Rentals IN ArizonA NOW!

The “Big, Beautiful” Tax Break: How to Use Bonus Depreciation for Short-Term Rentals in Arizona

PHOENIX, AZ – JULY 11, 2025: For savvy real estate investors in Arizona, a seismic shift in the tax code has just unlocked a massive opportunity. President Trump’s newly enacted “Big, Beautiful Bill” has reinstated one of the most powerful wealth-building tools available: 100% bonus depreciation.¹ This isn’t just a minor tweak; it’s a game-changer, especially for those in the lucrative short-term rental (STR) market.

Bonus Depreciation for Short-Term Rentals in Arizona:

If you own or are considering an Airbnb or VRBO in hotspots like Scottsdale, Sedona, or Phoenix, understanding how to leverage this tax break can dramatically accelerate your returns. This guide will break down exactly what the new bill means, how to apply it to your Arizona STR, and how to secure the right financing to acquire your next cash-flowing property.

What is 100% Bonus Depreciation (And Why It’s a Big Deal)?

Normally, when you purchase an investment property, you deduct its cost over a long period (27.5 years for residential real estate).² This is called depreciation. Bonus depreciation, supercharged by the “Big, Beautiful Bill,” allows you to take a huge chunk of those deductions in the very first year.³

The bill restores 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025.⁴ This reverses the phase-out that had begun, which would have reduced the benefit to just 40% in 2025.

How it works for your Arizona STR: While you can’t depreciate the land, you can accelerate the depreciation of specific components of your property. Through a cost segregation study, an engineering-based analysis, you can identify assets with shorter useful lives than the building itself. These include:

• 5-Year Property: Appliances, carpeting, furniture, and decorative lighting.
• 15-Year Property: Land improvements like fences, driveways, and landscaping.

With 100% bonus depreciation, the entire cost of these items can be written off in year one, creating a substantial “paper loss” that can significantly reduce your taxable income.⁵

The Arizona STR Market: A Goldmine of Opportunity

Arizona’s diverse landscape and year-round appeal make it a top destination for tourists, creating a robust STR market.

• Scottsdale: A hub for luxury travelers, golf enthusiasts, and major events.⁶ The 85254 “magic zip code” offers the prestigious Scottsdale address with Phoenix’s more favorable tax and utility structures.⁷ A high-end STR here, equipped with premium furnishings, can generate massive first-year write-offs thanks to bonus depreciation. The city requires a license for short-term rentals, so be sure to comply with all local ordinances.
• Phoenix: The heart of the Valley of the Sun, Phoenix offers a stable, year-round market. Neighborhoods like Roosevelt Row (ZIP 85004) and Arcadia are magnets for tourists seeking urban experiences.⁸ With a median home price hovering around $450,000, Phoenix presents an accessible entry point with strong rental demand.⁹
• Sedona: Famous for its stunning red rocks and spiritual retreats, Sedona’s vacation rental market is incredibly profitable. An STR here can command an average daily rate of over $270 with a 70% occupancy rate. Investing in a property in the Village of Oak Creek (86351) or near popular trailheads can provide both incredible scenery and substantial tax benefits.
• Other Hotspots: Don’t overlook burgeoning markets like Cottonwood in the Verde Valley wine region or the historic mining town of Bisbee, which offer unique charm and less market saturation.

What's the most appealing aspect of a DSCR loan for your investment property financing needs?

A) No personal income verification (no W-2s or tax returns needed!)B) Approval based on the property's cash flow (DSCR)C) Faster closing times compared to traditional mortgagesD) Flexibility for self-employed investors and complex financial situations

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Financing Your Arizona STR Investment with DSCR Loans

To take advantage of bonus depreciation, you first need to acquire the property. For real estate investors, traditional mortgages can be a hurdle due to their reliance on personal income verification. This is where Debt Service Coverage Ratio (DSCR) loans from a forward-thinking lender like GHC Funding become essential.

DSCR loans are the investor’s best friend. They qualify you based on the property’s income potential, not your personal tax returns. If the estimated rental income covers the mortgage payment (the “debt service”), you’re on your way to approval.

Current Market Insights (as of July 2025):

• Rates: For a DSCR loan in Arizona, expect interest rates to range from 6.5% to 8.5%. This is influenced by your credit score, the loan-to-value (LTV) ratio, and the property’s DSCR.
• Requirements:
  • DSCR: Lenders typically require a DSCR of 1.0x to 1.25x or higher.
  • Credit Score: A minimum score of 620-640 is common.
  • Down Payment: Typically 20-25% down.
  • No Personal Income Check: Your W-2s and personal debt-to-income ratio are not the primary focus.
  • Property Types: Ideal for single-family homes, condos, and multi-unit properties intended for rental.

Why GHC Funding is Your Go-To Lender in Arizona

In a competitive market, you need a lender who understands the investor mindset. GHC Funding specializes in financing solutions tailored for real estate entrepreneurs.

• DSCR Loans: GHC Funding’s expertise in DSCR loans means a streamlined process that focuses on the asset’s profitability, allowing you to scale your portfolio faster.
• Alternative Real Estate Financing: For unique properties or complex deals, GHC offers a range of creative financing options.
• Speed and Flexibility: GHC Funding understands that time is money in real estate. Their flexible underwriting and market expertise ensure you can close quickly and confidently.
• Other Loan Products: GHC also offers SBA 7a and 504 Loans for larger commercial projects and Bridge Loans to help you seize opportunities that require rapid financing.

Q&A for Arizona STR Investors

Q: Where can I find more resources for Arizona real estate investors?

A:

• Arizona Department of Real Estate (ADRE): For all licensing and regulatory information.
• Arizona Real Estate Investors Association (AZREIA): An excellent resource for networking and education with chapters in Phoenix, Tucson, and Prescott.
• AirDNA: For in-depth data and analytics on the short-term rental market.

Your Next Step to Building Wealth

The return of 100% bonus depreciation is a limited-time opportunity that savvy investors are already moving to capitalize on. By combining this powerful tax strategy with a strategically located Arizona short-term rental, you can generate significant cash flow and build long-term wealth. The key is to act decisively and partner with a lender who can facilitate your vision.

Ready to leverage the “Big, Beautiful Bill” and grow your Arizona real estate portfolio? Visit GHC Funding online or contact their team today to get pre-approved for a DSCR loan and start your journey.

How to use bonus depreciation for short-term rentals in 2025 – GET A NO OBLIGATION QUOTE:

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