Blog | “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

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 below table a comparative summary of these two packages.

Thus, we have juxtaposed them from a fiscal perspective. This analysis will enable you to identify the opportunity and to select the most interesting option.

Whether you select empty or furnished rental, you can deduct the costs and charges you face to rent your property. This is where the strategic choice of the type of project is very important because the rules for deducting the charges are different.

 

Taxation

Non-furnished rental

Furnished rental

Profitability & tax measures

Less than 20% on average compared to furnished location

- Gross and net profitability: higher compared to non-furnished rental because the received rent is higher;

- Very advantageous which reduces taxes and maximizes profitability.

Régime réel

- You can amortize the property;

-You can only deduct: improvement, maintenance and repair work

The lessor can add the depreciation of the value of the home which makes it possible to limit or even eliminate the taxation of rent;

- Are deductible: all types of work carried out on your property, namely construction, reconstruction and expansion work which will increase net profitability.

 

 

Deductible charges with « régime réel »

Non-furnished rental

Furnished rental

Notary fees

Not deductible        

Deductible

Honoraries of agency

Only the rental fees

Deductible

Price of the property

Not deductible        

Deductible

Price of the furniture

Only improvement works

Deductible

Expansion work

Not deductible        

Deductible

Reconstruction work

Not deductible        

Deductible

Construction work

Not deductible        

Deductible

Maintenance work

Deductible

Deductible

Repair work

Deductible

Deductible

Interest on loans

Limited to the total amount of annual charges and deficit carryforward

Deductible

Property tax

Deductible

Deductible

Property insurance

Deductible

Deductible

Agency fees

Deductible

Deductible

To sum-up, even if furnished rental appears to be more advantageous than non-furnished rental, it is nevertheless advisable to carefully study its drawbacks and limits before opting for this formula. The keys to a significant rental income are those of handling the management of the succession of rental contracts, a good geographical location and a dynamic rental market.

Also, if you do not delegate its management to a rental agency (which will take its commission on your rental income) you will have to devote time and energy to ensure this rental turnover. Not to mention that you will have to be available for your tenants to change furniture and equipment. It is therefore advisable to make this choice with knowledge by not basing your choice on simple calculations but by complicated financial and fiscal maths which might require the help of an accountant.

Unfurnished rental is more stable and requires less personal investment because the lease term is longer than furnished rental. The fact remains that if you want to get it back, you will have to be patient (6 months notice) and submit to legal constraints.

This type of rental is for informed investors. Do not hesitate to get help from professional accountants to identify the most profitable and sustainable option.

Want to know more ?

Contact us

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

Our recent posts

Selling a French property : what did the Brexit change ?
Selling a French property : what did the Brexit change ?
04/07/2022 - French taxes

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

Read more
French income tax
French income tax
04/07/2022 - French taxes

If you are planning to settle in France or simply own a property on French territory, it is crucial that you are aware o ...

Read more
Important rules for a furnished rental activity
Important rules for a furnished rental activity
04/07/2022 - French taxes

As a furnished rental provider, you can choose to declare tour revenues under the micro-BIC regime or under the “R ...

Read more
Top