Family property company (SCI): benefits, limits and when it really makes sense
Family SCI: estate planning, management, income tax or corporate tax. What to know before setting up an SCI to hold your property.
Hadrien Celarie
Co-fondateur
The SCI (société civile immobilière) is one of the most widely used tools for holding property as a family in France. It helps organise the management of a property, prepare its transmission and avoid some of the deadlocks of joint ownership. But it does not suit every situation. Here is an overview.
How does an SCI work?
An SCI needs at least two partners, for example parents and their children, or a couple. The company buys and owns the property. Each partner holds shares in proportion to their contribution.
The articles of association set the rules: who manages, how decisions are made, how shares can be transferred. Drafting them is decisive: this is where most of the SCI's benefits are secured.
Main benefits
Simpler management. The manager takes day-to-day decisions alone, within the articles. This avoids the unanimity rule that often paralyses joint ownership.
Gradual transmission. Parents can give shares to their children over time, using the €100,000 allowance per parent and per child, renewable every 15 years.
Optimised share value. When the SCI carries debt, the value of the shares given takes the debt into account, which reduces gift tax.
Retained control. Parents can remain managers, or keep the usufruct of the shares, and continue to decide and receive the rent.
Income tax or corporate tax: a key choice
By default, the SCI is subject to income tax: each partner declares their share of rents as property income. On resale, the private capital gains regime applies, with its holding-period allowances.
The SCI can opt for corporate tax. It can then depreciate the property, which greatly reduces tax on rents. However, the resale gain is calculated on the depreciated value, without allowances, and distributing profits is taxed. The option becomes irrevocable after five years: a choice to make with an accountant.
Limits to be aware of
Costs and obligations: drafting the articles, registration, accounting, annual meeting.
No regular furnished letting in an income-tax SCI, or it switches to corporate tax.
Unlimited liability of partners for the company's debts, in proportion to their shares.
No main-residence exemption on resale, except in specific cases.
When does it make sense?
An SCI is relevant for a rental property or a family home you want to pass on, for a portfolio of several properties, or for an unmarried couple buying together. For a simple main residence, it often brings more constraints than benefits.
LGH Patrimoine supports you in finding and acquiring property through an SCI, working with your notary and accountant on the legal and tax side.
