Real estate company (SCI) and property taxation

The Société Civile Immobilière (SCI) is a popular legal structure for owning and managing one or more properties. It allows for organizing ownership among multiple parties, preparing for asset transfer, or optimizing taxation. However, be cautious, as the choice of tax regime for the SCI (personal income tax or corporate tax) has major consequences. Here’s everything you need to know to make the right choices.

1. What is an SCI?

An SCI is a company created by at least two partners with the purpose of acquiring, managing, transferring, or renting real estate. It is particularly suitable for:

• Managing family assets
• Holding rental properties
• Optimizing asset transfer

Its main advantage is to separate property ownership from its management.

2. SCI under personal income tax (IR)

This is the default regime. The income generated by the SCI is taxed directly in the hands of the partners, according to their share.

• Rental income is included in each partner’s personal tax return
• Option to choose the actual regime with deduction of expenses, interest, and improvements
• Capital gains are taxed as for individuals (reduction based on duration of ownership)

✅ Ideal for reduced taxation in case of long-term ownership or if partners are not heavily taxed.

3. SCI under corporate tax (IS)

It is possible to voluntarily opt for corporate tax. In this case:

• The SCI becomes liable for corporate tax (15% or 25% depending on profits)
• Possible depreciation of the property: reduction of taxable income
• Dividends distributed to partners are then taxed as investment income

⚠ Warning: Upon resale, capital gains are calculated differently (net book value), which can result in heavy taxation.

4. Comparison of SCI under IR vs SCI under IS

Criterion	SCI under IR	SCI under IS
Income taxation	In the hands of partners	At the company level
Deductibility of expenses	Yes (actual regime)	Yes + depreciation
Capital gains taxation	Progressive reductions	No reduction, calculation based on net value
Accounting formalities	Simplified	Full accounting required

5. Practical cases: when to choose IR or IS?

SCI under IR: preferable if you’re investing long-term, with a focus on asset or family management, with little income to distribute.

SCI under IS: relevant if you want to optimize cash flow in the short/medium term, make significant depreciable improvements, or generate little resale.

The choice is irrevocable: it’s essential to seek good advice before opting for IS.

Domacap assists you in creating and optimizing your SCI

At Domacap, we help you:

• Choose between IR and IS based on your situation
• Structure your SCI according to your family, asset, and tax objectives
• Optimize your taxation at each stage (acquisition, operation, transfer)

A well-planned SCI is a powerful management and performance tool.

Conclusion

An SCI is an excellent lever for investing and transferring assets under the best conditions. However, taxation, often poorly understood, can turn a good project into a costly operation. Domacap supports you at every step to intelligently structure your real estate investment through an SCI.