Furnished rental: a tax opportunity for investors
Furnished rentals offer an attractive alternative for property investors, offering significant advantages over bare rentals. This type of rental involves renting a property already equipped with furniture and equipment necessary for daily life. Although furnished rental properties are often found on small surfaces (studios, one-bedroom apartments) in tense areas where tenants are generally more "mobile", the principle of furnished rental also applies very well to more large shared accommodations, as well as family properties (villas) in more rural areas. Furnished rental therefore seems to be an opportunity to study, whatever the type of accommodation!
Good to know: you can rent your main residence (and without having to request authorization), but within the limit of 120 nights per year!
The framework of furnished rental
Unlike bare rental, furnished rental offers increased flexibility, both for the owner and the tenant. It offers a shorter lease term, allowing, among other things, to be able to end a tenant's lease more easily if necessary (in the event of a need to return to the accommodation, in the event of unpaid debts on the part of the tenant, etc.) .
This status also offers a certain freedom in setting the rent, generally higher than that of a bare rental. In areas where rent is regulated, such as in Montpellier, this also makes it possible to apply a “rent supplement”, by adding value to the furniture.
In order to be eligible to rent a “furnished” property, decree no. 2015-981 of 07/31/2015 imposes a list of mandatory furniture items in the accommodation. This non-exhaustive list is relatively incomplete (for example, there is no obligation to provide a sofa, a TV, etc.). The owner will therefore have to choose between strictly limiting themselves to the list of mandatory elements, thus reducing the possibility of renting the property under a seasonal lease for example; or push the furnishing further by increasing the comfort of the accommodation (and in fact, the rent).
The 3 types of leases:
There are 3 types of leases allowing you to rent your property furnished:
The seasonal lease (maximum 90 days) allowing the greatest flexibility (Airbnb for example);
The mobility lease (between 1 and 10 months), often used during business trips as part of a mission lasting several months;
The residential lease (1 year renewable), which will be used in the case of rentals of indefinite duration. The owner will then be able to recover his accommodation on each anniversary date of the lease, with 3 months' notice, and under conditions (also remember to include termination clauses in the lease).
Tax advantages of furnished rental
LMNP status and tax regime
Owners investing in furnished rentals can benefit from the status of Non-Professional Furnished Rental Company (LMNP), under certain conditions (in particular the annual amount of rent received). This status allows you to receive untaxed rental income in the property income category. Indeed, income from furnished rental falls into the category of industrial and commercial profits (BIC).
Depreciation of property and furniture
One of the main tax advantages of furnished rental lies in the possibility of depreciating the property and the furniture, allowing part of their value to be deducted from the taxable rental income. This depreciation deduction can generate a significant reduction in income tax, or even a tax elimination in certain cases.
Micro-BIC or real simplified diet
Owners can have the choice, under conditions, between the micro-BIC regime allowing them to benefit from a flat rate reduction of 50% on rental income, or the simplified real regime which offers a deduction of real charges (loan interest, works, co-ownership charges, etc.). The choice often depends on the profitability of the property and the possibility of optimizing deductions. However, although calling on an accountant is not a legal obligation, it seems that many owners who have opted for the micro-bic regime for ease would have an interest in opting for the real regime. An expert opinion can sometimes help optimize your taxes!
Conclusion
Furnished rental represents an interesting opportunity for investors, offering significant tax advantages. This status allows advantageous taxation by considering rental income as industrial and commercial profits. The depreciation of property and furniture as well as the choice between the micro-BIC regime and the simplified real regime offer tax flexibility to investors, helping to maximize their rental yield and reduce their taxation. Beyond the tax aspect, furnished rental also provides greater flexibility, and makes it possible to optimize the amount of rent, particularly in areas with controlled rent.