Buying a property with a “Société Civile Immobilière”
An alternative to joint ownership, the “Société Civile Immobilière” (SCI – Real Estate Company) allows for the management of a property by several people and facilitates its eventual handover.
The SCI is a legal entity, the purpose of which is to hold one or several real estate properties. The SCI is the sole proprietor of these properties thanks to the money paid to the company by its partners (members of a couple, or of a family, or friends). The latter divide the membership shares in the SCI pro rata in line with their respective financial contributions. In the case of a bank loan, it’s the SCI that is the signatory to the loan and the partners who repay the debt in a percentage equivalent to their respective shares.
- The SCI enables common law husbands/wives or other individuals without parental links to organise the shared management of one (or several) real estate holding(s) and to facilitate their sale in the future.
- More stable than joint ownership, this method of ownership first and foremost allows for the protection of the surviving partner. For an unmarried couple, a special arrangement can be provided for that the beneficiaries or legatees of the deceased partner cannot themselves become partners without the agreement of the surviving partner.
- Where a partner leaves the SCI, the future of the property is guaranteed. Their shares may only be transferred to the other partners.
- Thanks to statutes drafted by a legal professional (lawyer, notary), it is possible to control the arrival of new entrants to the SCI partnership.
- The cost of the creation of an SCI (drafting of statutes, company registration) is around €1,000 – €3,500.
- Certain formalities must be respected. The SCI must regularly organise a general assembly and maintain annual accounts.
- In the case of disagreements between partners, it’s necessary to go to court to dissolve the structure. Such proceedings can take time.
- The purchase of a property via an SCI doesn’t allow for access to 0% loans nor a housing savings account. It’s also impossible to deduct interests on any mortgage from the partners’ taxable revenue.
- Beware! The partners in an SCI are jointly and severally liable. In the case that one defaults on the loan, the others may be pursued by the bank for the unpaid “share”.
- Contrary to popular belief, the SCI doesn’t offer any fiscal advantage. It does not allow for a reduction in income tax nor in the solidarity tax on wealth.