Money, tax and the law
Buying through an SCI, a French property company.
Some buyers hold their French home through a small company. It can make sense for a family; it is not a magic solution.
Contents
A société civile immobilière, or SCI, is a company whose purpose is to own and manage property. Its partners hold shares, and the company owns the house. It is common in France for families and for people who buy together.
Why buyers use it
- To buy with several people, children or friends, with clear rules on decisions.
- To pass the property on gradually, by giving shares over time.
- To organise who manages the property, through the articles of the company.
Costs and obligations
An SCI needs articles drafted by a professional, a registration, accounts, a yearly meeting of the partners and tax returns. It is an annual cost and some paperwork, to weigh against the benefits.
Tax: the points to check
By default, the SCI's income is taxed in the hands of its partners. It can opt for corporate tax, which changes everything, especially when the property is sold. Furnished letting through an SCI raises specific tax issues. For a non-resident, the shares of an SCI owning French property are treated as French property for several taxes.
And inheritance
An SCI does not escape the rules of inheritance, but it can help organise them. Whether it fits your family, your country of residence and your plans is a question for a notaire, before the compromis is signed, because the buyer named in the compromis must be the company or must be allowed to substitute it.
How I help
If you consider an SCI, tell me before the offer: I make sure the compromis allows the purchase through a company, and I put you in touch with a notaire who handles international families. I work in English and French every day. I also speak Hindi, Urdu and Punjabi fluently, Persian (Farsi) very well, and good Greek and Arabic.
Frequently asked questions
Can a foreigner create an SCI in France?
Yes. Partners can live abroad and have any nationality.
Is an SCI useful for a second home?
It can be, for a family that buys together or wants to pass the property on gradually. It has a yearly cost.
Can I buy through an SCI after signing the compromis?
Only if the compromis allows the substitution. Say it before signing.
Does an SCI avoid French inheritance tax?
No, but it can help organise the transmission. Ask a notaire.