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The pros and cons of unfurnished versus furnished rental

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.

 Unfurnished rental versus furnished rental
Unfurnished rentalFurnished 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
– Deduction of charges if the owner is in the “régime réel”  
DrawbacksLegal 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 unfurnished rental (maintenance + furniture)
– 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 groupAll type of tenantsMainly 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 costsLower starting cost than a furnished rental since there is no equipment or furniture to installHigher cost linked:
• Furniture essential to the tenant’s life
• More frequent maintenance and refreshment due to the higher turnover of tenants  
Lease term3 years minimum1 year minimum
Security deposit1-month minimum rent excluding charges1-month minimum rent excluding charges
Lessor prior notice6 months minimum3 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
StatusNone– LMP (Loueur Meublé Professionnel) or
– LMNP (Loueur Meublé Non Professionnel) For both you have to apply for a siret number, and with this number you can declare your annual income.
Income tax for the lessorRental 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 You can however choose the “régime réel” when you apply for a siret number.
• If the income is > € 72,600: all charges are deductible + depreciation of the value of the property  

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