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 – 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 | 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 |