If you’re looking to rent your home and are moving out, chances are you’ll view this as a good opportunity to sort through furniture and other property and maybe even get rid of a few things. Depending on your imminent relocation plans, you might consider leaving most of the furniture in the rental home so you can rent it as a furnished property. While this option is convenient -- less furniture to move, store, sell or donate -- determine first what makes the most financial sense.
While the cost difference between furnished and unfurnished rentals varies across the country, generally speaking you will not see a huge increase in rent for a furnished place. According to an article on the Arrowpoint Realty website, a furnished home "will command much higher rents in a few of the seasonal months," but that will be offset by greater amounts of time the property sits vacant. All things being equal, if there is a difference in rent for a furnished versus unfurnished apartment or home, it will be only slight. That said, whether you decide to list a furnished or unfurnished home is more a question of convenience and flexibility than of return on investment.
While most rentals on the market are unfurnished, furnished apartments are popular in locations with a high resident turnover rate, like college towns or areas where people relocate to warmer climates over the winter. Most renters looking for a furnished place are short-term renters. If they planned to stay awhile, they’d likely want to set up their home according to their tastes. Short-term rentals -- furnished or unfurnished -- typically rent for more per month than a long-term lease of the same property, according to the Rent.com website. As a general rule, any lease shorter than six or nine months is considered short-term.
Although you might be able to charge a bit more in monthly rent for a short-term furnished rental, you might also incur additional expenses. As the landlord, you’ll be responsible for keeping the furniture and appliances in good working order. Additionally, you might not be able to recoup the replacement cost for destroyed furniture or appliances if it exceeds your tenant’s security deposit. Short-term leases also require cleaning and repair on a more frequent basis due to tenant turnover.
If you rent your home furnished, you might be able to deduct some of the furniture costs maintenance, and upkeep from your income taxes. This includes necessary materials, repairs, and supplies needed to maintain the property to the current standard. Another option for landlords is to claim the replacement price of a piece of furniture. However, you’ll only be able to do this if you actually replace the furniture that year. You cannot deduct the cost of furniture that you already owned.
Convenience and Flexibility
Because the cost of renting a furnished property is not substantially higher than the cost of renting an unfurnished property, for many landlords the decision is all about convenience. For instance, if you’re moving across the country and do not want to haul all of your furniture with you, you might decide to rent your home fully furnished. Or you may simply decide that you like the idea of purchasing all new furniture in your new home. On the other hand, you might decide that the extra income is not worth the hassle of keeping the furniture repaired or replaced.
- The Move Channel: Looking for property - Furnished v Unfurnished
- Prime Location: Furnished or unfurnished?
- Apartment Ratings: The Cost Difference between Furnished and Unfurnished Apartments
- Pros and Cons of Short-Term Leasing
- Pros & Cons: Short-Term Apartment Leases
- Tips on Rental Real Estate Income, Deductions and Recordkeeping
- Tax Laws on Computer Expenses & Deductions
- How to Buy a House Specifically to Rent it Out for Profit
- Reasons to Buy a House
- Can I Prorate Rent for No Heat in an Apartment?
- How to Plan Your Finances While Renting an Apartment
- How to Create Cash Flow When Buying a Multi-Unit Apartment Building
- Can You Sell a Messy Home?
- Alternatives to Buying a Car