Best STR markets for bonus depreciation in 2026

The Smoky Mountains are the gold standard for STR bonus depreciation. Land in Sevier County is cheap — mountain terrain with limited buildable lots keeps improvement values high relative to land. A $500,000 cabin here might have a county assessed land value of $30,000–$50,000, meaning 90%+ of the price is depreciable improvements. Outdoor amenities — hot tubs, fire pits, game rooms, tiered decks — are essentially standard inventory. The area has seen heavy new construction since 2020, meaning modern finishes and systems that segregate cleanly into 5-year personal property. Average bonus dep yield: 22–28% of purchase price.

North Georgia mountain towns have been the fastest-growing STR market in the Southeast. Land values in Fannin and Gilmer counties are extremely low — Appalachian mountain terrain where the improvements cost far more than the dirt underneath. Blue Ridge attracts a high-income visitor base, which means developers have been building premium cabins: open floor plans, chef kitchens, multiple hot tubs, screened porches with outdoor fireplaces, game lofts. These finish profiles translate directly into strong bonus dep stories. Average bonus dep yield: 20–26% of purchase price.

The Poconos serve the massive New York–Philadelphia drive market. Monroe County has relatively low land values, and the STR inventory skews toward lake-access or ski-adjacent properties with indoor pools, game rooms, and hot tubs. Condo communities with significant common area improvements (fitness centers, pools, ski lifts) can add meaningful 15-year land improvement credits. The older housing stock (1970s–90s builds) slightly limits some 5-year property opportunities, but renovation activity is picking up. Average bonus dep yield: 18–23% of purchase price.

Missouri Ozarks lake markets have some of the lowest land-to-improvement ratios in the country. Waterfront access (docks, boat slips, shoreline) counts as 15-year land improvements at a pro-rata basis. The STR inventory mixes older lakehouse inventory with newer builds, so check individual property ages. Branson-area condos with shared lakefront amenities can be particularly strong.

Hochatown has exploded in the past four years. New cabin builds are plentiful, with modern A-frame and barndominium-style construction that tends to have excellent 5-year property profiles (exposed wood truss systems, LVP throughout, open kitchens, outdoor tubs). Low McCurtain County land values and nearly all-new construction make this a strong target market for bonus dep buyers.

Joshua Tree has high STR demand and distinctive property aesthetics that photograph extremely well. Desert land is relatively cheap by California standards, though land values have risen with the STR boom. Outdoor pools and container-style or architectural builds have strong personal property profiles. Check individual county assessments carefully — property values have increased significantly since 2020, and land ratios vary widely by micro-location.

Hawaii is a fantastic place to own a vacation rental and a poor place to own one if bonus depreciation is part of your thesis. Land in Hawaii is extraordinarily scarce and valuable — land values routinely represent 50–70% of property value. Your depreciable basis is tiny relative to purchase price, and there's often not much outdoor improvement either (small lots, condo-heavy inventory). Hawaii generates excellent revenue; it just doesn't generate much depreciation.

Florida beach markets have high STR demand and solid revenue, but beachfront and near-beach land commands a significant premium. Condos in high-rise towers do better (zero land allocation per unit) but have limited individual improvement value. Single-family homes near the water carry high land ratios. If you're buying in Florida for the revenue, that's legitimate — just don't expect the bonus dep story to be as strong as a mountain market.

Tahoe properties are beautiful and expensive — both the revenue and the land values reflect that. Lakefront lots are worth enormous amounts, which means a large fraction of the purchase price is non-depreciable. Additionally, STR regulations in South Lake Tahoe have tightened significantly, adding operational risk on top of the weaker depreciation profile. Nevada-side properties (Incline Village, Crystal Bay) have slightly better land ratios but similar overall dynamics.