SCI and LMNP: Understanding these two statuses
When investing in real estate, it's important to choose the legal and tax status best suited to the investor's objectives. Société Civile Immobilière (SCI) and the Loueur Meublé Non Professionnel (LMNP) are two common options, but they meet different needs. Before comparing their advantages and disadvantages, it's essential to understand how they work.
What is an SCI (Société Civile Immobilière)?
A Société Civile Immobilière (SCI) is a legal structure for purchasing, managing and transferring one or more properties to several partners. It is often used in a family or patrimonial context, as it simplifies the ownership of property by several partners and avoids joint ownership.
From a tax point of view, an SCI is by default subject to Income Tax (IR)This means that rental income is taxed in the hands of the partners according to their share. However, it is possible to opt for the Impôt sur les Sociétés (IS) (corporate income tax) regime, which allows the property to be depreciated and more expenses to be deducted. However, this option alters the tax treatment on resale, with a professional capital gains regime.
Setting up an SCI is therefore particularly well suited to projects involving several people who wish to manage a property jointly and organize its transfer.
What is LMNP (Loueur Meublé Non Professionnel)?
LMNP (Loueur Meublé Non Professionnel) status enables investors to rent out furnished property within a tax-advantaged framework. It is available to owners who rent out furnished properties, i.e. those offering tenants the equipment they need to live there immediately.
LMNP investors can choose between two tax systems:
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The micro-BIC scheme: a flat-rate allowance of 50% on rental income.
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The "régime réel" (real estate tax regime): this allows you to deduct all expenses (works, loan interest, management fees) and depreciate the property, thereby significantly reducing taxation.
Unlike SCI, LMNP is a simpler solution to set up, particularly attractive for individual investors looking to optimize the profitability of their rental property. However, it does impose a number of constraints, notably an annual rental income ceiling that must not be exceeded to retain non-professional status.
Thus, SCI and LMNP respond to different strategies: one favors collective management and the transfer of assets, while the other optimizes the taxation of rental income. The choice between the two depends above all on the investor's objectives.
SCI vs LMNP: The essential differences
The choice between Société Civile Immobilière (SCI) and Loueur Meublé Non Professionnel (LMNP) is based on several key criteria. The main differences concern taxation, management and the transfer of assets.
Tax system and taxation
One of the major differences between SCI and LMNP is their tax regime.
SCI: taxable for income tax or corporation tax
By default, an SCI is subject to income tax.
Each partner is taxed on rental income according to his or her share and marginal tax bracket. However, it is possible to opt for corporate income tax (Impôt sur les Sociétés- IS), allowing the property to be depreciated and more expenses deducted. This option can be advantageous, but it entails heavier taxation at the time of resale (professional capital gains regime).
LMNP: an attractive tax framework
LMNP status is a form of industrial and commercial profit (BIC), offering a more advantageous tax regime than a SCI subject to personal income tax. Two options are available:
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Micro-BIC, with a flat-rate allowance of 50% on rental income.
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The "régime réel", which allows all expenses to be deducted and the property to be depreciated, thereby significantly reducing the tax payable.
LMNP is therefore characterized by a more flexible tax system, often more favorable in the short term than that of SCI.
Asset management and transfer
Management and transfer of ownership also differ between these two types of company.
SCI: a suitable structure for transferring ownership
The SCI (non-trading property company) facilitates the transfer of assets, in particular by enabling the gradual transfer of company shares to heirs. This solution is an interesting way of avoiding joint ownership and structuring a family estate.
LMNP: a more rigid framework for inheritance
With LMNP, the property is transferred in your own name. In the event of inheritance, each heir receives an undivided fraction of the property, which can give rise to estate management and tax complications.
In short, SCI is better suited to collective management and optimized asset transfer, while LMNP offers greater short-term profitability thanks to its tax advantages.
Advantages and disadvantages of each status
The choice between Société Civile Immobilière (SCI) and Loueur Meublé Non Professionnel (LMNP) is based on an analysis of the advantages and disadvantages of each system. While the SCI is often preferred for asset management and transfer, the LMNP is a fiscally attractive option for generating rental income.
The advantages of SCI
The SCI is an asset management tool that enables several people to jointly acquire and manage a property. The main advantages of the SCI are :
Easier transfer of assets
With a non-trading property company (SCI), you can gradually transfer your shares to your heirs, benefiting from successive tax allowances. This makes it possible to anticipate inheritance while limiting gift costs.
Better management organization
Unlike undivided ownership, the SCI avoids the blockages associated with unanimous decisions. Each partner holds shares, and decisions can be taken in accordance with the company's articles of association.
Tax flexibility
The SCI is by default subject to income tax (Impôt sur le Revenu - IR), but can opt for corporation tax (Impôt sur les Sociétés - IS). This option offers the possibility of depreciating the property and deducting certain expenses, which can be interesting for tax optimization.
However, SCI also has its drawbacks.
More stringent legal and accounting formalities
Creating articles of association, holding general meetings, managing tax obligations, etc. SCI requires rigorous monitoring.
A sometimes heavy tax burden on resale
If the non-trading property company is subject to corporation tax, the resale of the property is subject to capital gains tax, which is generally higher than for private individuals.
The advantages of LMNP
LMNP is an accessible status that optimizes rental profitability thanks to significant tax benefits. Its main advantages are as follows.
Tax advantages
The micro-BIC scheme offers a 50% allowance on rental income, while the actual scheme allows you to deduct expenses and depreciate the property, thereby reducing the tax base.
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Simplicity of management: unlike SCI, LMNP does not require the creation of a specific legal structure. The investor rents the property in his or her own name, reducing administrative and accounting procedures.
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Optimized profitability: thanks to property depreciation and tax deductions, LMNP allows you to generate little or no taxable rental income for several years.
However, LMNP also has its limits:
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A more complex transfer: in the event of inheritance, the property is held in joint ownership, which can cause management difficulties between heirs.
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Income ceilings to be respected: LMNP status is subject to an annual rental income ceiling of 23,000 euros, or must not exceed 50% of the income of the tax household, failing which the status is changed to that of Loueur Meublé Professionnel (LMP), with more restrictive tax rules.
In short, the SCI is ideal for structuring and transferring real estate assets, while the LMNP is an effective solution for optimizing the taxation of rental income in the short and medium term.
SCI or LMNP: which option best suits your project?
The choice between SCI and LMNP depends above all on your investment strategy and wealth objectives. Some situations are better suited to one or the other. Here are the criteria to consider when making your decision.
For short-term rental investment
If your aim is to generate rental income quickly and optimize your taxation, LMNP status is often more advantageous:
- The LMNP tax system allows you to considerably reduce the tax on your rental income, thanks to the actual tax system, which allows you to deduct expenses and depreciate the property.
- Management is simplified: no legal status to create, a more flexible framework and fewer administrative formalities.
- In the event of a short- or medium-term resale, the capital gains regime for individuals is often more favorable than that for companies (SCI à l'IS).
LMNP is therefore best suited to individual investors wishing to rent out a furnished property without legal constraints and with optimized short-term profitability.
For a long-term or family project
If your aim is to transfer assets, manage several properties with other partners or avoid joint ownership, the SCI is a more suitable solution:
- It facilitates collective management and avoids conflicts in the event of inheritance. Each heir can receive shares in the SCI, rather than an undivided share in a property.
- Tax advantages on transfer: shares can be transferred gradually, with tax allowances renewable every 15 years.
- By clearly defining the rules in the articles of association, the SCI makes long-term management more secure.
The SCI is therefore better suited to family or heritage investments, where durability and transmission are priorities.
To maximize tax benefits
If your priority is tooptimize the taxation of rental income, the choice will depend on the type of property and the tax regime you are looking for:
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The LMNP real-estate scheme allows you to depreciate the property and considerably reduce or even neutralize the tax on rental income.
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On the other hand, a non-trading property company (SCI) governed by corporation tax (IS) allows you to depreciate the property while deducting more expenses, but incurs higher taxes on resale (capital gains tax).
The choice between SCI and LMNP therefore depends on your investment project, your holding period and your tax situation.
Mistakes to avoid when choosing between SCI and LMNP
Choosing between a Société Civile Immobilière (SCI) and a Loueur Meublé Non Professionnel (LMNP) is a decision that needs to be carefully considered. The wrong decision can have serious tax and wealth consequences. Here are some common mistakes to avoid.
Getting the tax system wrong
One of the most common pitfalls is misjudging the tax impact of choosing between SCI and LMNP.
Rents are taxed as property income in the hands of the associates, which can result in high taxation depending on their marginal tax bracket.
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SCI (non-trading property company)
Although this option allows you to depreciate the asset and deduct expenses, the tax burden on resale is heavier, with taxation on professional capital gains.
It offers attractive tax benefits, with income declared as BIC (micro-BIC or régime réel), but there are income ceilings that must not be exceeded, or you risk becoming a Loueur Meublé Professionnel (LMP).
It is therefore essential toanalyze the tax implications in advance, and to choose the structure that best matches the investor's financial and wealth objectives.
Not anticipating resale and transmission
Another common mistake is neglecting the consequences of reselling or transferring a SCI or LMNP property.
- With LMNP, resale benefits from the capital gains regime applicable to private individuals, which is often more advantageous than that applicable to companies. On the other hand, passing on the property to heirs can be complicated by the fact that it is held in the owner's own name, which can lead to joint ownership.
- With a non-trading property company (SCI), the transfer of shares is more flexible, as you can gradually give them to your heirs, with the benefit of tax allowances. However, if the SCI is subject to corporation tax, capital gains tax on resale is higher.
Anticipating these aspects helpsavoid unforeseen tax costs and ensures optimal long-term asset management.
