What is an SCI and why set one up
A Societe Civile Immobiliere (SCI) is a legal structure that allows several people (the partners) to hold and manage a property portfolio together. Each partner holds shares proportional to their contribution, and decisions are made collectively according to the articles of association.
An SCI is set up to invest as a couple, with family or with friends, to facilitate wealth transfer (by gradually gifting shares), or to separate property assets from personal assets. It is also a way to structure an investment when you want to buy jointly without resorting to joint ownership (indivision).
An SCI (Societe Civile Immobiliere) is a legal structure allowing multiple partners to hold and manage real estate assets. It facilitates transmission and offers specific tax options.
SCI under income tax (IR) or corporate tax (IS): two fiscal options
By default, the SCI is subject to income tax (IR): the income is taxed directly in the hands of each partner, in proportion to their shares, within their own tax bracket. It is fiscally transparent, as if each partner held the property directly.
The SCI can also opt for corporate tax (IS). In this case, it is the company that is taxed on its profits (15% up to 42,500 euros, then 25%). The main advantage: an SCI under IS can depreciate the property, just like LMNP. The drawback: capital gains on resale are calculated on the depreciated value, which increases the tax burden upon disposal.
| Criterion | SCI (Income Tax) | SCI (Corporate Tax) |
|---|---|---|
| Taxation | Partners' income tax | Corporate tax |
| Depreciation | No | Yes |
| Capital gains | Individual regime | Professional regime |
| Transmission | Company shares | Company shares |
The practical advantages of an SCI
An SCI facilitates joint management: the articles of association define management rules, the manager's powers and profit distribution. It avoids the problems of joint ownership (indivision) where every decision requires unanimity.
For inheritance planning, the SCI allows shares to be gifted progressively to children, taking advantage of tax allowances (100,000 euros per parent per child every 15 years). The value of shares can also be discounted by 10 to 15% compared to the property's value, reducing gift tax.
On Buy&Rent, you can simulate an SCI analysis with the share distribution among partners and automatically compare the IR vs IS results.
SCI advantages
The drawbacks to be aware of
An SCI has running costs: formation fees (1,500 to 3,000 euros), mandatory accounting (especially under IS), annual general meeting. The administrative formalities are heavier than with direct ownership.
Under an IS SCI, depreciation reduces the annual tax but creates a significant latent capital gain in the event of resale. You need to think long term and not plan to sell in the short term.
Banks are sometimes more demanding when financing an SCI: higher deposit required, personal guarantees from partners, sometimes slightly higher rates.
An SCI involves setup costs (EUR 1,000-2,500), mandatory accounting under corporate tax, annual administrative formalities, and capital gains under corporate tax are calculated on net book value (less favorable upon resale).
Who is the SCI suited to
An SCI is relevant if you invest with others (couple, family, partners), if you have a wealth transfer objective, or if you want to build a structured property portfolio over the long term. For a first solo investment, direct ownership under LMNP is often simpler and more tax-efficient.
Before getting started, simulate both options on Buy&Rent to compare the cashflow, taxation and net yield in each configuration.