When contemplating a real estate project as a family, the question of choosing the right legal structure arises.
There are two popular options:
Each of these structures has its own specific features, advantages and disadvantages, depending on management, transfer and tax objectives.
The SCI is generally preferred for property management, as it separates the property from the partners' personal assets. It also offers advantages when it comes to transferring assets within the family.
On the other hand, the SARL de famille, while providing flexible management of real estate assets, can also be used for commercial activities such as non-professional furnished rental (LMNP). This choice can also be compared with other options, such as SCI vs LMNP, depending on your tax and asset management objectives.
In this article, we'll explore these two structures, their main features, advantages and disadvantages, to guide you in choosing the solution best suited to your family plans. Find out how SeDomicilier can help you make the best choice for your specific needs.
Understanding the basics of SCI and SARL de famille
Before embarking on a family real estate project, it's essential to understand the basics of the two main legal structures available: the Société Civile Immobilière (SCI) and the SARL de famille. Each meets specific needs, depending on the partners' wealth and tax objectives.
When choosing between an SCI or a SARL de famille, it's sometimes necessary to think about company domiciliation, a useful service for any legal structure, whether SCI or SARL de famille.
Non-trading property company (SCI)
The SCI is a legal structure dedicated to the management of real estate. Setting up an SCI enables several people (usually members of the same family) to join forces to acquire and manage one or more properties.
The main advantage of the SCI is its flexibility when it comes to managing and transferring assets. The partners can choose to share the management of the property, with profits distributed according to the number of shares held.
From a tax point of view, SCIs are generally subject toincome tax (impôt sur le revenu - IR), which means that profits are taxed directly in the hands of the partners, according to their share in the company. However, it is also possible to opt forcorporation tax (IS), which reduces taxation in certain cases, notably for rental management.
The family LLC
The SARL de famille is a variant of the Société à Responsabilité Limitée (SARL), in which all partners are members of the same family. It combines the advantages of a commercial structure with an appropriate tax regime. A family SARL can carry on a commercial activity while benefiting from an advantageous tax regime, by opting for income tax (IR) rather than corporation tax (IS). This option is particularly attractive for non-professional furnished rentals (LMNP).
Like the SCI, the SARL de famille limits the liability of associates to their contributions, thereby protecting their personal assets. It is therefore best suited to real estate projects that include a commercial activity, such as furnished rental.
Advantages and disadvantages of SCI
The Société Civile Immobilière (SCI) is a popular choice for managing family real estate assets. However, before embarking on this structure, it's important to know the steps involved in setting it up, and the tax implications. If you're wondering how to set up an SCI, there are detailed guides to help you understand the steps to take and the legal formalities to comply with.
Advantages of SCI
1. Flexible property management
One of the main advantages of the SCI is the ability to manage a property collectively as a family. Each partner holds shares corresponding to a portion of the property, facilitating shared management. This model optimizes management, particularly when it comes to sharing rental income or making important decisions concerning the property.
2. Easier transfer of assets
The SCI allows for a gradual transfer of assets within the family. It is possible to transfer shares to children or other family members, while maintaining control over the property. This transfer can be carried out without having to sell the property, thus preserving the integrity of the family estate while reducing gift tax thanks to the distribution of shares.
3. Tax optimization
By opting for income tax (impôt sur le revenu - IR), the SCI allows associates to benefit from taxation on profits in proportion to their shareholding, which is often more advantageous from a tax point of view than corporation tax (impôt sur les sociétés - IS). In addition, the SCI can deduct certain expenses incurred in managing the property (such as management fees, repairs, etc.), thereby reducing taxable income.
Disadvantages of SCI
1. Complex management
Although the SCI allows for collective management, it can sometimes lead to complications, particularly when decisions have to be taken unanimously or by a qualified majority. What's more, administrative and accounting management can be cumbersome, especially if the SCI owns several properties or has a large number of partners.
2. Unlimited liability of associates
Although the partners' liability for SCI debts is limited, there is a risk that the partners may be liable to the company's creditors. In the event of mismanagement or substantial debts, partners may be held liable to the extent of their share in the company.
3. Administrative costs and tax advantages in some cases
Setting up and running an SCI involves a number of costs, including drafting the articles of association, notary fees and annual accounting. What's more, although the corporate income tax option can be advantageous in certain situations, it entails double taxation in the event of dividend distribution.
Advantages and disadvantages of the SARL de famille
If you're wondering"Which status should I choose for my business?", it's essential to understand the advantages and constraints of each legal structure. The SARL de famille, for example, makes it possible to reconcile commercial activity and property management, but other options may also be considered depending on your tax and asset objectives.
Advantages of the SARL de famille
Limited liability of associates
One of the main advantages of the SARL de famille is the limited liability of the partners. In the event of the company incurring debts, partners risk losing only their contributions and not their personal assets. This protection is a major advantage for real estate investors, especially when the projects are large-scale.
Tax flexibility
The SARL de famille offers considerable tax flexibility, in particular by choosing the income tax (IR) regime rather than the corporation tax (IS). This choice is particularly advantageous for property owners who wish to avoid the double taxation that is common with corporate income tax. The SARL de famille can thus benefit from a lighter tax burden, particularly for non-professional furnished rental projects (LMNP).
Adapted to commercial activity
In addition to its ability to manage real estate assets, the SARL de famille is a commercial structure, which means that it can be used for commercial activities such as furnished rental. This model is ideal for people wishing to develop a commercial activity linked to real estate, while benefiting from the protection of limited liability.
Disadvantages of the SARL de famille
Complex management
The SARL de famille, although more flexible than a conventional business corporation, can be complex to manage due to the administrative and accounting formalities involved. Setting up a transparent and efficient management system can entail additional costs, especially if chartered accountants have to be consulted.
High payroll taxes
As a business structure, the SARL de famille is subject to social security charges on remuneration paid to partners. These charges can be high, particularly if the partners receive a salary or dividends. This is a major disadvantage compared with the SCI, where the partners are less exposed to such charges.
Less flexible than SCI in terms of transfer
Although creating a SARL de famille allows you to transfer shares, the transfer of assets is not as smooth as with a SCI. Transfers of shares are subject to more stringent SARL rules, which can complicate the gradual transfer of real estate assets between family members.
Practical comparison: SCI vs SARL de famille
When choosing between an SCI and a SARL de famille, it's essential to understand the specifics of each structure. Here's a handy comparison to help you better assess which of the two options is best suited to your real estate or commercial projects.
Comparison of key features
Real-life use cases
SCI
If your aim is to manage a family real estate portfolio and facilitate its transfer without selling the assets, the SCI is the ideal choice. It enables you to bring together several family members to acquire property, while separating personal assets from those of the company. The SCI is also advantageous if you wish to optimize rental management and the distribution of profits between partners.
Family LLC
The SARL de famille is preferable if your real estate project includes a commercial activity, such as non-professional furnished rental (LMNP). It allows you to benefit from an advantageous tax regime while enjoying limited liability, which protects the partners against the company's debts. What's more, if you're planning a parallel business activity (such as trading in real estate), the SARL de famille is the most suitable legal structure.
Points to consider when making your choice
Project type
If your project is purely real estate, the SCI will probably be more advantageous. However, if you are combining real estate with a business activity, a SARL de famille may be more appropriate.
Taxation
If you want a flexible tax regime, the SCI, with its option for income tax (IR), is ideal. The SARL de famille also offers this option, but is more geared towards commercial activities.
Wealth transfer
The SCI offers great flexibility in the gradual transfer of shares. The SARL de famille, on the other hand, imposes stricter restrictions on the transfer of shares.
The choice between an SCI and a SARL de famille depends on a number of criteria, which vary according to the nature of your real estate project, your tax objectives, and the way in which you wish to manage and pass on your assets. Here are a few tips to help you make the best choice for your needs.
Type of real estate project
If your main project is real estate, and you want to manage one or more properties as a family, the SCI is often the best choice. It allows you to separate the management of your real estate assets from your personal finances, while offering great flexibility in the management and transfer of assets. If you're not planning a commercial activity, the SCI is clearly the structure to choose.
Real estate-related business activity
If you intend to rent out furnished property (non-professional furnished rental, LMNP) or run a commercial business, the SARL de famille may be more advantageous. It allows you to carry on a commercial activity while benefiting from lower taxation via the option of income tax (IR). It is particularly well-suited to those wishing to combine property management and commercial income, within a framework protected by the limited liability of the partners.
Taxation and earnings management
The SCI offers great tax flexibility. By opting for income tax, you can declare property income directly on the partners' tax returns. This can be advantageous if you don't want to incur the heavy social charges associated with corporate income tax. On the other hand, if you prefer to opt for corporation tax (IS), this can be interesting if you wish to benefit from specific tax deductions and lower taxation on profits reinvested in the company.
Wealth transfer
If one of your objectives is to pass on your wealth, the SCI offers great flexibility. You can transfer shares without having to sell the property, simplifying the gradual transfer of your real estate assets to family members. The SARL de famille, while also allowing the transfer of shares, presents more restrictions and is less flexible when it comes to transfers.
In conclusion, the choice between an SCI and a SARL de famille depends largely on the nature of your real estate project, your tax objectives and your priorities in terms of asset management and transmission. If your main objective is to manage real estate assets and gradually pass them on within the family, the SCI will probably be the most appropriate choice, thanks to its flexibility and tax advantages.
On the other hand, if you plan to add a commercial activity to your real estate project, such as non-professional furnished rental, the SARL de famille will be more advantageous. It offers limited liability for the partners and a flexible tax system, making it particularly attractive for those wishing to run a real estate-related business.
Whatever your choice, it's essential to assess your needs and get the right advice. For more information on choosing the legal structure that best suits your real estate project, SeDomicilier is here to support and guide you.
