Furnished vs unfurnished rentals: which should you offer?
Furnishing a unit widens your pool to people who move often or arrive with nothing, but you take on the cost of buying, repairing and replacing the furniture. Work out the extra rent you need to pay for it over the years it lasts. For taxes, IRS Publication 527 treats furniture, appliances and carpeting used in a residential rental as 5 year property, so the cost is deducted through depreciation over time instead of in one year.
Who rents a furnished unit
Furnished units suit people who move for a short time or on short notice: a traveling worker, someone between homes, a person new to the city. They tend to have shorter stays, so you may turn the unit more often. Unfurnished units suit people who own their own things and plan to stay longer.
We do not quote a rent premium for furnished units, because it varies by market. Look at similar furnished ads near you and compare them with unfurnished ones before you spend.
Work out the rent premium you need
- List what you would buy: a bed, a sofa, a table, chairs, lamps, a TV stand.
- Add the cost, then add a figure for repairs and replacements each year.
- Divide the cost by the months you expect the furniture to last.
- Add the monthly repair figure. That is the extra rent you need just to break even, before any profit.
Example a made-up owner spends $4,000 to furnish a one bedroom and expects the furniture to last 5 years, or 60 months. $4,000 divided by 60 is about $67 a month. Adding $300 a year for repairs and small replacements is $25 a month. The owner needs about $92 a month in extra rent to break even. Asking $150 more than the unfurnished rent leaves about $58 a month toward the extra turn time and risk.
How furniture is deducted
IRS Publication 527 says appliances, carpeting and furniture used in a residential rental activity are 5 year property under the General Depreciation System, and its Table 2-1 lists them at 9 years under the Alternative Depreciation System. You normally recover the cost over those years. The percentages for each year are in the IRS depreciation tables in Publication 946.
Example a made-up $4,000 of furniture placed in service this year. Under the common 5 year half-year table, the yearly deductions are 20 percent, 32 percent, 19.2 percent, 11.52 percent, 11.52 percent and 5.76 percent: $800, $1,280, $768, $460.80, $460.80 and $230.40. They add up to $4,000. Your numbers depend on when the items are placed in service and your elections, so ask your preparer.
Small items may be expensed at once under the safe harbor for small purchases. Read our de minimis safe harbor guide first.
What changes in the lease
- Attach an inventory list with the condition of each item, with photos, and have the tenant sign it. It is your proof at move out.
- Say who replaces light bulbs, who moves furniture and whether the tenant may remove or add pieces.
- Separate normal wear from damage on furniture just as you would for walls and floors.
- Decide how a furniture repair request is handled, because a broken bed is your item.
- Check the deposit limit. California Civil Code 1950.5(c) caps security at one month's rent, with a two month exception for small landlords, and the text we read sets no separate cap for furnished units. Other states differ.
A quick way to decide
| Question | Points toward furnished | Points toward unfurnished |
|---|---|---|
| How long do your tenants stay? | Short or uncertain stays | A year or more |
| Is the premium above your cost? | Yes, with room to spare | No |
| Can you store and replace furniture? | Yes | No |
| How many nearby units are furnished? | Few | Many |
If you are not sure, furnish one unit and keep the numbers. Compare the days vacant, the rent and the repair cost with an unfurnished unit of the same size.
How DoorKeeping handles it
Furniture is recorded in that property's books, apart from the other properties, so your preparer can set up the 5 year schedule at tax time. Ask Claude or ChatGPT through DoorKeeping for the break even premium from your inputs. The inventory list is a document stored with the lease.
Sources
- IRS, Publication 527, Residential Rental Property (5 year property, Table 2-1), read Oct 30, 2026
- IRS, Publication 946, How To Depreciate Property (percentage tables), read Oct 30, 2026
- California Civil Code section 1950.5, security deposits, read Oct 30, 2026
Questions
- How much more rent should a furnished unit charge?
- At least enough to pay for the furniture over its life plus repairs. Divide the cost by the months it will last and add yearly repairs, then compare furnished ads near you.
- How is rental furniture depreciated?
- IRS Publication 527 treats furniture used in a residential rental as 5 year property under the General Depreciation System. Your preparer will pick the table and any election.
- Do I take a bigger deposit on a furnished unit?
- Some states set one cap for all units. California Civil Code 1950.5(c) caps security at one month's rent, with a small landlord exception, and the text we read has no separate furnished cap. Check your state.