A Société Civile Immobilière (SCI), or Real Estate Investment Company, is a popular legal structure for purchasing property jointly—whether it's a family residence or a real estate investment. By organizing ownership through shareholding and appointing a manager, the SCI simplifies day-to-day management, enables tax optimization, and facilitates estate planning. This guide outlines the legal characteristics, advantages, and step-by-step process for creating an SCI and successfully completing a property purchase under this structure.
What is an SCI, and what are its advantages for a real estate property purchase in France?
An SCI (Société Civile Immobilière) is a legal entity created to hold and manage real estate assets on behalf of shareholders. It is characterized by the ownership of shares (parts sociales) held by at least two shareholders (individuals or legal entities), and it serves a strictly civil purpose: acquiring, managing, renting out, or transferring real estate—without conducting any regular commercial activity.
Unlike undivided ownership, where decision-making is often difficult due to the requirement of unanimity, the SCI separates the company’s assets from the personal assets of its shareholders. It also establishes decision-making rules in the company's bylaws (statuts).
Each shareholder’s rights are proportional to their contribution (in cash or in-kind), enabling clear distribution of expenses and profits. Although shareholder liability is unlimited (they are liable for debts based on their ownership share), well-drafted bylaws can mitigate risk by clearly defining management rules, transfer of shares, and approvals.
The structure also improves borrowing capacity: banks evaluate the collective financial strength of the SCI when granting loans, making it easier to buy property jointly.
SCI: A Legal Structure Suited to Joint Property Purchases
Creating an SCI requires at least two shareholders and the drafting of formal bylaws (either privately or through a notarial deed). A manager (gérant) is appointed to represent the company and handle administrative matters. The bylaws define the manager’s powers, the frequency of general meetings, entry and exit rules for shareholders, approval procedures for share transfers, and decision-making thresholds. This governance framework helps prevent deadlocks and ensures secure co-ownership.
Key Advantages of Buying Property through an SCI
Purchasing property via an SCI offers several benefits:
Simplified joint management (e.g., shared expenses, appointed manager)
Separation of personal and company assets, offering partial protection
Potential tax optimization (choice between personal income tax or corporate tax)
Streamlined estate planning, through progressive transfer of shares, benefiting from applicable tax allowances
For investment purposes, the SCI allows amortization of assets, splitting of rental income and expenses, and—optionally—taxation under the corporate regime to spread out the tax burden. Moreover, it simplifies intergenerational transfers, as transferring company shares often reduces inheritance taxes and allows for strategic succession planning.
How to Set Up an SCI to Buy Property
Creating an SCI involves several formal steps and strategic decisions:
Draft tailored bylaws that reflect the project’s purpose (e.g., family residence, rental investment, or unit allocation SCI). The bylaws specify the company’s purpose, share capital, division of ownership, management powers, meeting procedures, and shareholder approvals.
Make the initial contributions (cash and/or assets), open a bank account in the SCI’s name, and publish a legal notice in an authorized journal.
Register the SCI with the Commercial and Companies Register (RCS). Once registered, the SCI becomes a legal entity and may enter into a purchase agreement contingent on financing approval.
Engaging a notary is strongly advised—especially if contributing real estate (in-kind), as this typically requires a notarial deed. Similarly, working with a tax advisor or accountant helps ensure compliance and optimize tax efficiency.
Estimated setup costs vary by complexity and professional assistance: legal notice (approx. €150–250), registration fees (approx. €60–80), plus notary/accounting fees ranging from a few hundred to several thousand euros.
Different Types of SCI for Property Acquisition in France
Several types of SCI are tailored to specific goals:
Family SCI – Ideal for joint family ownership and inheritance planning
Rental management SCI – Best suited for buy-to-let investment and passive income
Allocation SCI – Used to buy and divide property into separately owned units
Professional SCI – For owning business premises, subject to specific regulations
The chosen type influences the bylaws, tax regime, and long-term strategy.
Key Steps in Forming an SCI
In practice, setting up an SCI involves:
Drafting and signing the bylaws
Making contributions: cash (deposited into the SCI’s bank account) or in-kind (real estate transferred via notarial deed)
Publishing a legal notice of formation
Submitting the registration file (form M0 and supporting documents) to the Commercial Court to obtain the Kbis (company ID document)
Timelines range from a few days to several weeks depending on professional support. Costs typically start at a few hundred euros, excluding advisory fees. Note that annual accounting and, in case of corporate tax (IS) election, additional tax obligations will apply.
Financing a Property Purchase via an SCI
Several funding sources may be combined: shareholder contributions, shareholder loans (current account advances), and bank loans issued to the SCI. The financing method determines loan guarantees, deductibility of expenses, and the SCI’s borrowing capacity. It is crucial to define the financing plan early on to secure lender approval.
Contributions in Cash and In-Kind
Shareholders can contribute to the SCI in:
Cash (numéraire): Simple deposit into the SCI’s bank account, in exchange for shares.
In-kind assets (nature): Such as real estate, typically requiring notarial deeds and precise valuation, which affect shareholding structure.
An alternative is shareholder loans (current accounts): allowing shareholders to fund the SCI without increasing capital, and be repaid later. These must be documented (repayment terms, interest, etc.) to avoid conflicts.
Bank Loans for French Property Purchases by an SCI
Most SCI acquisitions are financed via mortgages taken out in the SCI’s name. Lenders assess both the SCI’s financial position (capital, projected rent) and shareholders’ solvency. Common guarantees include:
Real estate collateral (hypothèque or lender’s privilege)
Personal guarantees from shareholders (joint and several liability)
Loan conditions (rates, terms, down payments) are similar to those offered to individuals, though lenders may require a stronger rental case (e.g., tenant contracts, occupancy rate).
Important: A financing contingency clause must be included in the purchase agreement to protect the SCI if the loan is denied.
Note: Government-subsidized loans such as the PTZ (zero-interest loan) are typically unavailable to SCIs, as they are reserved for individuals. Some exceptions may apply for eco-renovation loans (eco-PTZ) under strict conditions.
Taxation of the SCI After Property Acquisition
Choosing the tax regime is a strategic decision for SCIs acquiring real estate. By default, an SCI is transparent and taxed under personal income tax (IR). However, it may opt for corporate tax (IS), which significantly alters how income, expenses, and capital gains are handled. This decision should be carefully planned, especially for long-term asset transfers.
SCI Taxed Under Personal Income Tax (IR)
With IR, the SCI is fiscally transparent:
Rental income is allocated to shareholders based on their ownership ratio
Each shareholder reports their share in their personal tax return
Deductible expenses include loan interest, repairs, property taxes, insurance, and management fees
This structure is ideal if shareholders want to benefit from property-related tax deductions or maintain favorable personal tax conditions.
On resale, capital gains are taxed individually, with tax relief for duration of ownership (per French law on private capital gains).
SCI Taxed Under Corporate Tax (IS) – Implications
Electing IS transforms the SCI into a taxable entity:
Net rental income (after deducting amortization and expenses) is taxed at corporate rates
Depreciation of the property can reduce taxable income significantly
Only SCIs taxed under IS can depreciate assets
However, distributing profits (dividends) triggers additional taxation for shareholders: social contributions and income tax (flat tax or progressive rates). Capital gains on resale are calculated based on book value, leading to potentially higher taxes than under IR, plus possible double taxation on distributed profits.
Note: The IS option is usually binding but can be revoked within five fiscal years. Consult a tax advisor before electing this regime, especially for estate planning.
SCIs conducting regular commercial activities (e.g., furnished rentals) are automatically subject to corporate tax under French tax law (CGI art. 206).
Selling a Property Held by an SCI: Procedures and Taxation
Selling a property owned by a Société Civile Immobilière (SCI) follows specific rules: it is the legal entity (the SCI) that sells the property, decisions are made collectively by the partners, and taxation depends on the SCI’s chosen tax regime (income tax or corporate tax), as well as the nature of the transaction (sale of the asset or transfer of shares). Anticipating these steps helps avoid unexpected costs and choose the most beneficial strategy for all partners.
Process and Sale Procedures for a Property Held by an SCI
The sale of a property owned by an SCI must be approved in accordance with the company’s articles of association: a general meeting must be called, and a vote held under the specified majority rules (simple, qualified, or unanimous for certain decisions). Once approved, the SCI signs the preliminary agreement and the final deed, just like any other seller.
In practice, if one or more partners refuse the sale, the articles often include approval clauses (preventing the entry of a new partner without consent) or pre-emption mechanisms. In cases of prolonged disagreement, legal recourse is possible (dissolution/liquidation), but this can be lengthy and costly. It is therefore advisable to include exit mechanisms from the outset (partner agreements, buy-back price, valuation methods).
Once the sale is completed, the proceeds are received in the SCI’s name. Distribution among partners is handled through accounting, based on their respective ownership shares, after settlement of company debts and transaction costs (notary fees, agent commissions, taxes). If the SCI is dissolved following the sale, a liquidator distributes the net assets to the partners.
Taxation on Sale: Calculation and Possible Exemptions
Tax treatment depends on the SCI’s tax regime:
SCI subject to personal income tax (transparent): The capital gain is taxed at the individual level, as a private capital gain. The calculation follows the rules applicable to individuals (holding period allowances, possible full exemption from income tax after a certain period, and eventual exemption from social security contributions after a longer holding period). Deductions and allowances depend on how long the asset was held and the property’s nature (main residence, rental, etc.).
SCI subject to corporate tax: The capital gain is calculated based on accounting rules (sale price minus net book value after depreciation). It is taxed at the corporate tax rate, and distribution of sale proceeds as dividends may incur additional tax at the partner level. Overall, taxation may be heavier than under personal income tax, especially if the property has been significantly depreciated.
Alternatives and Optimizations
Share Transfer: Instead of selling the property, partners can sell their shares in the SCI. Capital gains on share sales follow a different regime (capital gains on securities) and may offer tax advantages depending on the circumstances (valuation, tax regime, holding period). This setup requires careful planning (share valuation, partner agreements, tax audit exposure).
Possible Exemptions: Main residence status of a partner, small-scale sales, or holding duration rules may allow for partial or full exemptions. These rules are technical and require a detailed simulation.
Operational tips: Have the property professionally appraised, confirm the applicable tax regime (income or corporate tax), simulate the tax impact of an asset sale vs. a share sale, and include appropriate contingency clauses (e.g., approval, tax) in the preliminary contract if needed.
Conclusion — 5 Key Takeaways on Creating an SCI for Property Transactions
Collective decision-making: Selling a property in an SCI must follow the rules set out in the articles—check quorum and majority requirements before entering negotiations.
Tax regime is decisive: Tax consequences vary drastically depending on whether the SCI is under income tax or corporate tax—always simulate both scenarios.
Asset sale vs. share sale: Selling the property versus selling shares leads to very different tax outcomes—discuss with your notary or accountant.
Prevent disputes: Include in the articles or partner agreements mechanisms for partner exits (buyout pricing, mutual agreement terms, approval clauses, pre-emption rights) to avoid deadlocks.
Plan and seek expert support: Get a valuation, anticipate tax and legal costs, and rely on a notary, chartered accountant, or real estate advisor for strategic guidance.
Have an SCI real estate project or considering a sale?
Optimhome real estate advisors support families and investors at every stage—from property acquisition via an SCI to the final sale. Contact your local Optimhome advisor for a tailored analysis of your project and browse our property listings across France to find the best real estate investment opportunities.
FAQ: Frequently Asked Questions about Buying and Selling Real Estate via an SCI
How do you buy real estate with an SCI?
Partners must first create the SCI (draft articles, register with the Trade and Companies Register), then the property is purchased in the SCI’s name using contributions from partners and/or a bank loan.
Is it easier to get a loan through an SCI?
Banks assess the SCI’s collective financial strength but often require personal guarantees from partners. This can make financing group purchases easier, though conditions may be stricter than for individual buyers.
What is an SCI?
A Société Civile Immobilière is a legal entity designed to hold and manage real estate with multiple partners. It is structured with shares and managed by a designated manager.
Why create an SCI?
An SCI allows for joint ownership, facilitates estate planning, improves rental management, and offers flexible tax options. It also prevents common deadlocks in joint ownership (indivision).
How do you set up an SCI?
You must draft the articles of association, make contributions (cash or property), publish a legal notice, and register the SCI with the RCS. A notary or professional advisor can assist.
Why buy property through an SCI?
It allows partners to pool funds, manage property collectively, and plan inheritance more effectively. It suits both families and investors.
How do you create an SCI for a property purchase?
You must establish the SCI before purchasing: draft the articles, open a bank account, register the entity, then sign the preliminary sales agreement in the SCI’s name. The financing is carried out by the SCI, supported by the partners.
Can a family SCI rent out property?
Yes, a family SCI can manage and rent out property. Rental income is collected by the SCI and distributed to partners based on their shareholding.
What are the benefits of an SCI?
It simplifies group ownership, eases inheritance planning, secures collective decision-making, and allows for optimized taxation (income or corporate tax). It is a flexible and well-recognized structure.
What are the downsides of an SCI?
It requires formal setup, ongoing costs (legal, accounting), and regular management. Partners have unlimited liability, and tax regime selection can become complex depending on the project.
Property purchase: SCI or personal ownership?
Personal ownership is simpler but less flexible for group purchases. SCIs involve more paperwork but offer better tax planning and inheritance strategies.
What steps are required to sell property held by an SCI?
The decision to sell must follow the company’s internal rules (general meeting, majority). The SCI signs the agreements; proceeds are distributed after settling debts.
Are capital gains the same in an SCI and individual ownership?
No. In an income-taxed SCI, capital gains follow the same rules as for individuals. Under corporate tax, gains are based on accounting value and taxed accordingly, with possible additional tax at distribution.
Is selling SCI shares advantageous?
Sometimes. Selling shares may avoid certain costs and apply different tax rules, but requires proper valuation and verification of internal clauses.
What if a partner disagrees with a sale in the SCI?
Check approval and buyout clauses in the articles or partner agreements. Without consensus, legal procedures are available but lengthy—planning contractually is best.
Should I consult a notary or accountant before selling property in an SCI?
Yes. A notary and accountant can help optimize your strategy (asset sale vs. share sale), assess tax implications, and ensure a secure transaction.
Author of the Publication
Fabrice DOBROWOLSKI, Network Development Director at Optimhome
“Benefit from my expert advice, based on many years of experience in the real estate sector, to ensure the success of your buying or selling project.”
