What is an SCI?
The essentials of non-trading property companies
Setting up a société civile immobilière (non-trading property company, or SCI) offers the opportunity to build up and manage a property portfolio as a group. This legal structure requires a minimum of two partners. The SCI allows you to manage one or more properties. Each partner has shares in the company. These are calculated on the basis of the contribution made.
SCI: a company with statutes
A société civile immobilière (non-trading property company) is governed by articles of association. The drafting of the articles of association determines the decision-making procedures of the SCI: majority, unanimous, etc.
The SCI's articles of association specify how the company's manager is selected. The manager is responsible for the day-to-day management of the company and its real estate holdings. The bylaws specify the content of the manager's mandate, in particular his or her powers to carry out formalities without systematic reference to the partners.
What are the different types of SCI?
There are several types of non-trading property companies:
What are the advantages of a société civile immobilière (SCI)?
A société civile immobilière (non-trading property company) offers a number of advantages for managing and passing on your real estate assets.
Managing your real estate assets efficiently
The debts and profits of an SCI are shared between the partners, in proportion to their respective contributions. When work needs to be carried out on the property, the cost is borne by all associates on the basis of their shareholdings.
When selling a property held by an SCI, the agreement of the majority of partners is essential. The legal form of a property company protects all owners in the event of disagreement over the management of the property. The purpose of the SCI is to protect property assets.
The SCI status is of particular interest when it comes to managing family real estate. You can entrust your family property to a mandated, paid manager or to a volunteer manager.
Passing on your real estate assets while optimizing taxation
The SCI is an efficient solution for passing on your real estate assets. Parents wishing to pass on a property to their children can opt for the scheduled sale of SCI shares.
The law provides for tax allowances for inheritance tax in direct lines. You can benefit from an allowance of 100,000 euros per child for each donation made over a 15-year period.
Real estate investments
Buying a house as an SCI offers a number of advantages in terms ofreal estate investment. You can :
- increase your ability to finance a property;
- optimize your chances of obtaining bank financing;
- mutualize the charges and costs associated with owning a property.
Investing in an SCI allows you to become part owner of a property. It's an opportunity to invest in real estate when you don't necessarily have the funds to acquire a property on your own.
Setting up an SCI involves following the same administrative procedures for launching commercial companies: SASU, EURL, SAS, SARL, etc.
How to set up an SCI
To set up an SCI, there are a number of steps to follow:
How do you go about setting up an SCI (société civile immobilière)?
Feeling apprehensive about setting up your SCI? SeDomicilier offers personalized support for investors wishing to set up their own SCI. We offer the following services:
- Drafting and updating of SCI articles of association.
- Assistance with the registration of share capital.
- Drafting and publication of your announcements in a legal gazette.
- Declaration to the Guichet unique for SCI registration.
- Drafting of general meeting minutes, etc.
A domiciliation company brings real added value to the day-to-day management of your SCI. Whether you want to set up a family SCI or a traditional SCI, our team will advise you on how to operate it.
How are SCI profits taxed?
The tax regime for an SCI varies between income tax and corporation tax.
Income tax or corporation tax?
A société civile immobilière (non-trading property company) that makes a profit from renting out its properties can pass these profits on to its partners. Income from property is subject toincome tax. The partner specifies the amounts received in his tax return .
When an SCI rents out furnished property, its activity is considered to be commercial. The SCI is therefore subject to corporate income tax.
SeDomicilier offers you a summary table to help you choose between corporate income tax and personal income tax:
SCI tax obligations
An SCI is not obliged to file its accounts every year if it is subject to income tax. It simply has to file an annual income tax return. Its manager keeps simplified accounts to justify management operations.
The company must keep more detailed accounts when it opts for corporate income tax:
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Journal book: an accounting document that chronologically records transactions relating to SCI assets: debits, credits.
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General ledger: an accounting document listing transactions already listed in the daybook, but organized by accounting account.
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Annual financial statements: balance sheet, income statement and notes to the financial statements must be filed at the end of each financial year with the clerk's office of the relevant Commercial Court.
SeDomicilier provides you with tailor-made advice on setting up your accounts. Thanks to our legal advisory services, you're no longer alone with your questions.
Buying a house as an SCI is an excellent idea when you want to acquire and manage a property as a family.
What is a family SCI?
A family SCI is a classic SCI in which the partners belong to the same family circle. This means that the partners must be directly related or related by marriage.
To set up a family SCI, at least two partners are required. They must be related between the 1st and 4ᵉ degree. This includes the following family members: parents, children, grandparents, grandchildren, great-grandparents, uncles and aunts, nieces and nephews, cousins. Members of an SCI may be united by a marriage contract or a PACS.
The SCI familiale cannot carry out commercial activities. It is therefore not possible to acquire a property with a view to reselling it immediately. The activity of a SCI familiale is limited to the joint acquisition and management of a property. This type of non-trading property company is a good way for families to invest in rental property.
Is it possible to borrow money to buy a house with a family SCI?
A family SCI can acquire a house through a bank loan.
Taking out a bank loan to buy a house with a family SCI
The partners in a family SCI do not necessarily have the necessary funds to purchase a house. The use of an SCI loan is therefore essential. Banks are able to provide loans for SCIs. A partner can also take out a personal loan.
SCI: a legal entity
The SCI is a legal entity. It is therefore not eligible for interest-free loans. A property loan granted to an SCI can be repaid in different ways:
- forward ;
- depreciable ;
- in advance ;
- at fixed or variable rates.
When granting a loan to an SCI, the bank is particularly attentive to the personal financial situation of each partner. The partners of an SCI have indefinite liability. In the event of the SCI being unable to repay its loan, the bank is able to call on the partners to dispose of the loan payment. The partners' personal assets may be committed up to the limit of their share of the share capital.
SeDomicilier offers you a summary of family SCI borrowing:
Whether you're a single person or a couple, you can present your SCI home-buying project through a personal loan.
What are the advantages and disadvantages of buying a home through an SCI?
There are both advantages and disadvantages to buying a house through an SCI.
The advantages of buying a home through an SCI
Buying or bequeathing a property through an SCI offers a number of advantages.
Escaping joint ownership with a family SCI
Buying a house with a family SCI offers the advantage ofavoiding joint ownership. What is indivision? Indivision is the situation where several heirs to a property come together at the time of an inheritance or gift. Indivision occurs after the death of the original owner. The property then belongs to all the heirs, without their respective shares being clearly identified.
In the case of joint ownership, the house becomes undivided. Each co-heir receives a share in the form of a quota-part. Indivision is a transitional stage in the settlement of the estate. When the estate is divided in the presence of a notary, the indivision is lifted.
In a SCI family, a house is divided into shares, which are distributed among the various partners.
A partner may sell his or her shares in accordance with the provisions of the SCI's articles of association. In the event of inheritance, the property is transferred to the designated heirs on the basis of these shares. The real estate asset thus remains intact. A change of ownership of the shares has limited impact on the management of the property.
Reducing notary fees when buying with an SCI
One of the advantages of buying a house through an SCI is the reduction in notary fees. In the case of an individual property purchase, notary fees can amount to up to 8% of the purchase price. These include transfer duties and registration fees.
Buying a house through an SCI reduces acquisition costs. These are calculated on the amount of the shares and not on the total value of the property.
Registration fees do not apply to property declared as a principal residence. If a SCI partner declares his or her principal residence as a property of the SCI, it is not subject to registration duty when acquired or transferred.
The disadvantages of buying a house with an SCI
Buying a house with an SCI has its drawbacks. SeDomicilier invites you to discover them.
Real estate capital gains
Capital gains are defined as the difference between the purchase price of the property and its value at the time it was incorporated into the SCI. Each partner is taxed on this capital gain on the following basis:
- 19% of the capital gain ;
- 17.2% social security contributions.
Respecting SCI management rules
An SCI must comply with the rules governing the keeping of accounts and the organization of general meetings. These obligations cannot be waived. You must therefore choose a competent and trustworthy manager.
Buying a house through an SCI allows you to benefit from tax advantages in the event of inheritance. It's an excellent solution for preparing the transfer of a family's real estate assets. The SCI is still an attractive financial and tax lever for acquiring real estate and managing it between partners.
