Blog | “Empty rental” versus “furnished rental”: overview of these two investments

“Empty rental” versus “furnished rental”: overview of these two investments

Comparison of the two options:

The choice of the type of rental is one of the key elements for the success of your investment. We offer you in the below table a comparative summary of these two regimes.

To do so, we have juxtaposed them from a demand and tax’s profitability perspective. This comparison will allow you to identify opportunities and direct you to the most interesting option.

 

 

Comparative table : empty rental versus furnished rental

Empty location

Furnished rental

Main advantages

- Security due to the duration of the lease

- Stable activity: the research of tenants is less frequent than for furnished rentals

- Reduced tasks related to the management of the apartment since tenants take turns less than in furnished (fewer arrivals and departures)

- Flexibility in rental and contractual management

- Attractive taxation

- Increased profitability

- Amortisation of charges if the owner is in the “régime réel”

 

Drawbacks

Legal constraints:

• The termination of the lease is possible only under certain conditions

• Long notice for the tenant (6 months)

• If the tenant is over 70 years old with a low income, the landlord must find him a substitute accommodation before termination.

- Lower rents than for a furnished rental

- Furnish the accommodation

in accordance with the decree of July 31, 2015

- Cost of housing higher than in empty location (maintenance + furniture)

- If you do not manage your property:

• Tenants must be rotated to avoid rental vacancies which would weigh on profitability.

• You risk to be asked by your tenant for maintenance and / or change of furniture and equipment in the event of a problem

Target tenant

All type of tenants

Students, professionals in mobility, holidaymakers

Size of the property

- Large appartements

- House

- In large metropolises: small areas especially near universities

- In tourist areas: several rooms

Number of rooms

- Several rooms

- Studio or two rooms: target = student

- Two or three rooms: target = collocation and vacation rental

Owner-occupied housing costs

Lower starting cost than a furnished rental since there is no equipment or furniture to install

- Higher cost linked:

• Furniture essential to the tenant's life

• More frequent maintenance and refreshment due to the higher turnover of tenants

 

Lease term

3 years minimum

1 year minimum

Security deposit

1-month minimum rent excluding charges

 

Lessor prior notice

6 months minimum

3 months minimum before the end of the lease

Tenant prior notice

- 3 months minimum

OR

- 1 month if the accommodation is located in a tight zone

- 1 month minimum

Status

None

- LMP (Loueur Meublé Professionnel) or

- LMNP (Loueur Meublé Non Professionnel)

Income tax for the lessor

Land income to be declared:

your rental income is subject to income tax. The rules differ depending on the amount of this income:

 

If the rental income is <€ 15,000: you will automatically be subject to the “micro-foncier” regime.

You can however choose the “régime réel”: in this case, this option will be irrevocable for 3 years.

The tax administration applies a standard allowance of 30%.

Works and charges cannot be deducted.

 

• If the rental income is> € 15,000: You must calculate your net property income, that is to say the gross income (rents collected during the year) after deduction of charges (works, insurance, property taxes, etc.).

Rental income to be declared:

As a “loueur en meublé non professionnel (LMNP), the income you earn from the rental of furnished premises, is subject to the progressive scale of income tax:

 

If the income is <€ 72,600:

micro-BIC scheme: 50% flat-rate deduction on income

 

• If the income is> € 72,600:

all charges are deductible + depreciation of the value of the property

 

 

 

 

 

Want to know more ?

Contact us

Contact us and we’ll get back to you as soon as possible.

Our recent posts

“Empty rental” versus “furnished rental”: overview of these two investments
“Empty rental” versus “furnished rental”: overview of these two investments
21/07/2021 - French taxes

Comparison of the two options: The choice of the type of rental is one of the key elements for the success of your i ...

Read more
“Empty rental” versus “furnished rental” : comparaison of these two options from a fiscal point of view
“Empty rental” versus “furnished rental” : comparaison of these two options from a fiscal point of view
21/07/2021 - French taxes

As the choice of the type of rental is one of the key elements for the success of your investment, we offer you in the b ...

Read more
Selling a French property : what did the Brexit change ?
Selling a French property : what did the Brexit change ?
23/03/2021 - French taxes

Brexit brought lots of changes in many areas and of course your French property won't escape it. British people a ...

Read more
Top