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 rental||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
– Deduction 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 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 group||All type of tenants||Mainly students, professionals in mobility, holidaymakers|
|Size of the property||– Large appartements |
|– 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||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) For both you have to apply for a siret number, and with this number you can declare your annual income.
|Income tax for the lessor||Rental 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