When starting a rental investment, one question always arises: should we opt for furnished rental or unfurnished rental? This choice is crucial, as it directly impacts your profitability, your taxation, and your daily management.
Furnished location: definition and legal obligations
What is furnished housing?
A furnished rental must be ready to accommodate a tenant without them needing to purchase anything other than their personal belongings. Since the decree of July 31, 2015, the law specifies the list of furniture and mandatory equipment for a dwelling to be considered furnished.
Minimum equipment for furnished rental
For a dwelling to comply with furnished rental, it must include:
A bed with a duvet or blanket
Curtains or shutters to cover the windows
Cooking plates
An oven or a microwave
A refrigerator with a freezer compartment
Dishes and kitchen utensils
A table and seats
Shelves or storage
Lighting fixtures
Housekeeping equipment suitable for the characteristics of the dwelling
A well-equipped property is more attractive, which allows for a higher rent than in unfurnished rental.
Higher rents: the advantage of furnished rentals
Why is furnished rental often more profitable?
The furnished rental is recognized for offering a higher gross return. On average, a furnished property rents 20% more than an equivalent unfurnished rental. In student or tourist cities, this gap can rise to 30%.
Concrete example: a studio in Lille rents for 550 euros in unfurnished rental. Furnished with care, this same studio can easily rent for 700 euros per month, resulting in 1,800 euros of additional income per year.
The tax advantages of furnished rental
The other strong point of furnished rental is the taxation.
With the LMNP (Non-Professional Furnished Rental) status, you have the choice between:
The Micro-BIC system, with a flat-rate deduction of 50% on your rental income (up to 77,700 euros per year).
The Real system, which allows you to deduct all your actual charges (property tax, insurance, loan interest…) and especially to amortize the property and the furnishings.
This depreciation drastically reduces your taxable income, which often allows you to not pay taxes on your rents for several years.
Naked location: a reassuring stability
Why choose bare rental?
The bare rental remains a popular choice for its stability. A lease in bare rental lasts at least 3 years, automatically renewable, which guarantees a longer occupation. Tenants often stay for several years, which limits vacancy periods and costs related to re-rentals.
The advantages of bare rental
Less management on a daily basis
Fewer tenant rotations
Lower costs for reinstatement between two rentals
No initial investment in furniture
For an investor who prefers peace of mind and rental stability, unfurnished rental is a reassuring option.
Lease and notice: the differences between furnished and unfurnished rental
Lease Duration and Security Deposit
Unfurnished rental: lease of minimum 3 years, renewable.
Furnished rental: lease of minimum 1 year (or 9 months for a student).
Security deposit: 1 month of rent excluding charges maximum for unfurnished rental, 2 months maximum for furnished rental.
Notice
Notice for the tenant: 3 months in unfurnished rental (1 month in a tense zone), 1 month in furnished rental.
Notice for the landlord: 6 months in unfurnished rental, 3 months in furnished rental.
These differences in duration and notice period influence the turnover and flexibility of the lessor.
Taxation of bare rentals
Tax Regimes for Unfurnished Rentals
In unfurnished rentals, the taxation is less advantageous than for furnished rentals. Two options exist:
Micro-property: a deduction of 30% on income, up to 15,000 euros in rent per year.
Actual property regime: deduction of actual expenses (maintenance work, loan interest, property tax…). But no depreciation is possible.
Unlike furnished rentals, construction or expansion work is not deductible in unfurnished rentals. The net profitability is often lower.
Conclusion: furnished rental or unfurnished rental, what to choose?
The choice between furnished rental and unfurnished rental must align with your wealth strategy. If your goal is to maximize profitability while optimizing taxation, furnished rental is clearly the most interesting due to the LMNP regime and depreciation. If you prioritize rental stability and simplified management, unfurnished rental remains a safe bet.
In all cases, carefully compare the gross and net profitability, taking into account management costs, taxation, and the type of tenants you wish to attract.
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