You have inherited a property and are facing a crucial question: Should you rent out the inherited apartment furnished or unfurnished? This decision can affect your return, your administrative effort, and the type of tenants you attract by up to 30%. This guide provides you with the necessary key figures for a well-informed, strategic decision.
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The topic briefly and concisely
Furnished rentals can increase rental income by 10-30%, but they require more management and carry risks due to wear and tear.
The rent control generally also applies to furnished apartments; the furniture surcharge is added to the local comparable rent.
The cost of furniture can be tax-deductible, either immediately (up to €800) or over a useful life of 10 years, which reduces the tax burden.
Inheriting a property immediately raises the question of optimal use. The decision to rent out an apartment furnished or unfurnished is much more than a matter of taste – it is a strategic lever for your financial success. While renting furnished often promises higher rental income of 10-30%, it involves greater administrative effort and higher initial investments. An unfurnished apartment, on the other hand, attracts long-term tenants and reduces effort, but may lower returns. This article analyzes both options based on legal, tax, and financial indicators, so you can make a data-driven decision that suits your situation.
The essentials at a glance: Your strategic options
The decision between furnished and unfurnished renting depends on three factors: your target audience, your risk tolerance, and your time horizon. Renting furnished can increase the rent by up to 30%, but it targets short-term tenants like expats or project staff. The unfurnished option promises stable, long-term tenancies with less administrative effort. Consider the tax deductibility of furniture over 10 years and the legal framework of rent control, which also applies to furnished apartments.
Financial Analysis: Furnishing Allowance and Tax Benefits
The furnished letting allows the imposition of a furniture surcharge, which directly increases your yield. This surcharge is not legally capped but is calculated in practice according to two models. The surcharge is a crucial lever for amortising your investment. The "Hamburg Model" has become established for the calculation, considering acquisition costs, an assumed useful life of seven years, and an interest rate of up to 15%. Alternatively, there is the "Berlin Model", which sets a monthly rate of 2% of the current value of the furniture, with the furniture depreciated over 10 years. A comprehensive rental yield calculator can help you compare both scenarios. The tax treatment offers additional benefits: costs for furniture under 800 euros net can be immediately deducted as advertising expenses. More expensive purchases are depreciated linearly over their typical useful life of usually 10 years, reducing your tax burden annually by 10% of the acquisition costs. These tax aspects are central to addressing the question of what your inherited property is really worth.
Target audience and market demand: Who rents what?
Your decision for or against furnishing directly defines your target audience and affects the vacancy rate. Unfurnished apartments are the standard for the German rental market and attract tenants looking for a long-term home that they can furnish with their own belongings. This target group tends to result in tenancies that often last 5 years or longer. Furnished apartments, on the other hand, cater to a niche with a high willingness to pay. These include:
Expats and professionals: This group requires a flexible housing solution for projects lasting 6 to 24 months.
Students: Particularly international students favour a fully equipped apartment for one or two semesters.
Weekend commuters: Professionals whose primary residence is in another city often need a second home.
People in transitional phases: A temporary solution is often sought after a separation or during house construction.
The demand for furnished accommodation is up to 25% higher in metropolitan and university cities than in rural areas. Therefore, a precise analysis of what rent you can charge depends on the location. The right strategy depends significantly on the micro-location of your property.
Legal framework: Rent control and contract design
A common misconception is that renting a furnished apartment bypasses the rental price cap. In principle, the rental price cap also applies to furnished apartments, meaning the rent must not exceed the local comparative rent by more than 10%. The furnishing surcharge is added on top of this capped rent but must be calculated transparently. An exception lies only with renting for temporary use, such as holiday apartments or short-term project rentals. Here, the rental price cap does not apply. Furnishing alone is not a sufficient reason for a fixed-term rental agreement. A fixed-term rental agreement is only permissible if there is justified interest (e.g., own use). For furnished rentals, a detailed inventory list in the rental agreement is essential to document the condition and completeness of the furnishings upon departure. A professional checklist for apartment handover protects you from later disputes.
Administrative Effort and Risks in Comparison
The decision between furnished and unfurnished has a direct impact on your ongoing efforts. An unfurnished property means minimal effort after handover for years. In contrast, furnished renting is different. The administrative effort is estimated to be around 40% higher. The tasks include:
More frequent tenant changes: Shorter rental periods of 6-24 months lead to more new rentals.
Furniture maintenance: You are responsible for the repair and replacement of worn or defective furniture.
Wear and tear: Furniture depreciates over the years, requiring regular reinvestment.
Insurance: Household or specific contents insurance is advisable to cover damages.
Careful documentation of the inventory condition at each tenant change is your most important tool for risk mitigation. Consider whether the potentially higher return justifies this additional effort for you. A clear strategy on whether to sell or rent your inherited house should take these efforts into account.
Conclusion: Make a data-driven decision
Whether you should rent out your inherited apartment furnished or unfurnished is not a straightforward decision. Unfurnished rental offers security and low effort, ideal for owners seeking a passive income source. Furnished rental is an active investment strategy that, if implemented correctly in prime locations, can achieve returns up to 30% higher, but also requires more capital and commitment. The key to success lies in a precise analysis of your property and the local market. An AI-powered real estate valuation from Auctoa provides you with the necessary data to objectively compare potential rents for both scenarios. Use our ImmoGPT chat to quickly clear up initial questions and refine your strategy. Your decision sets the course for the coming years – make it based on facts, not gut feeling.
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Additional useful links
Statista offers detailed statistics on rental prices for furnished and unfurnished apartments, broken down by region.
The Institute of the German Economy in Cologne provides the latest landlord report for Germany.
Wikipedia offers a comprehensive article on the topic of rental price indices.
The Federal Ministry of Finance provides information about inheritance and gift tax.
The Federal Statistical Office provides data and information on construction prices and the real estate price index.
The Federal Statistical Office provides a table on rents in relation to household net income.
The Federal Statistical Office offers information on the proportion of tenants in Germany.
FAQ
What is included in the basic furnishings of a furnished apartment?
A furnished flat should include at least a fully functional kitchen with appliances, a bed, a wardrobe, a table with chairs, and a seating area in the living space. Washing machines, lamps, and basic kitchen utensils are often expected as well.
Who is liable for damage to the furniture?
The tenant is liable for damages that go beyond normal wear and tear. The landlord must account for normal signs of wear. A detailed inventory list with photos in the handover protocol is essential for documenting the condition during move-in and move-out.
What lease durations are common for furnished apartments?
Furnished apartments are often rented for limited periods of 6 to 24 months, particularly to target groups such as expats or project workers. However, a time limitation is only legally permissible under certain conditions, such as personal use or renting for temporary use.
Is it worth renting out furnished accommodation in every location?
No, a furnished rental is mainly worthwhile in large cities and university towns with a high density of businesses, commuters, and international professionals. In rural areas, there is usually a higher demand for unfurnished, long-term housing.
Does the furnishing surcharge need to be specified in the rental agreement?
No, the landlord is not obliged to detail the exact calculation or amount of the furnishing surcharge separately in the tenancy agreement. It is sufficient to indicate the total rent. However, for transparency and in case of any legal disputes, a comprehensible calculation is essential.
Which insurance is sensible for renting out a furnished apartment?
In addition to building insurance, it is advisable for landlords to consider contents or inventory insurance. This covers damage to furnishings caused by fire, water, or burglary. Tenants should also be encouraged to take out private liability insurance.
