Should you furnish your rental property for a better return in Luxembourg?
Once you have invested in a rental property in Luxembourg, there are a few things to consider.
Do you need to upgrade the property before you can rent it at a higher price? Do you want to rent it "empty" or with furniture?
This is an excellent question, and here are some solutions!
Higher rents and potential tax benefits are the advantages of renting a furnished property
You can save money on taxes by renting your property in Luxembourg as a "furnished rental". The furniture and equipment you buy for the interior depreciate over time. This means that you can deduct them from your rental income, but only if you respect the rules.
Buying new furniture can reduce your taxable income, leaving you more money to spend on rent increases. Of course, if two properties are identical in terms of size and other key features, the rent for the one you don't have to do anything but unpack will be higher. If you are looking to invest in a rental property in Luxembourg in order to minimize your tax liabilities and collect the highest possible rent, you should be aware that you cannot charge more than twice the rate that would apply to an "empty" apartment or house.
Risks of vacancy and gradual deterioration of rental properties
Renting apartments in Luxembourg for individuals can be complicated when furniture is included. At the end of the lease, it is important to make an inventory of all the equipment, not just the walls, taps and electrical appliances. A broken drawer, a cabinet door that won't stay closed or a refrigerator that doesn't work properly are just a few examples of furniture defects that need to be considered.
The risk of damage increases the likelihood of legal action. We advise you to hire a real estate agency in Luxembourg to take care of the rental management of your property so that you don't have to worry about the daily operations of your rental property investment.
If you take into account that tenants in furnished rentals tend to be less reliable, you will appreciate their service even more. Although these properties usually find a tenant quickly, the contracts may not be long term, which increases the risk of vacancy... In order to sign a new contract, it is usually necessary to re-run the ad.
There is no universally correct answer to the question "should I furnish my property for rent in Luxembourg or not? If you want to be sure to make the right choice, do not hesitate to consult professionals.