No, utilities being included does not count on the same level as furniture.Good point since they are furnished!

does that mean it is "furnished" to the tenants?

Depends on your definition of the word "furnished" in the context you used.

 - Furnished: to provide furniture in the house for the use of the paying tenants

 - Furnished: To provide the tenant with a service, such as electricity, cable, or water.

For the first definition. if you did not provide the tenants a furnished house, then no.

For the 2nd definition, if you include the cost of utilities in the rent, then yes.

But either way, if you state you provided a "furnished" structure for your tenants, then you are claiming that you own all of the furniture in that house and that the cost of using that furniture is included in the rent.

The utilities you pay for are a deductible expense, on Schedule E, line 17.