A “family” real estate civil society (SCI) is a legal structure made up of at least two people belonging to the same family (Cohabitants are not included in this configuration). The members have the status of associate to jointly manage one or more properties. The lifespan of a family SCI is limited to 99 years.
The “family” SCI is particularly suitable for managing a family heritage as you can transfer shares of your SCI to your children. You can benefit from reductions on direct line donation rights (100 000 EUR per child renewable every 15 years). The majority of the shares of the SCI is necessary to proceed with the transfer of the property and protect the heritage.
The debts and profits generated by the real estate assets are distributed among the members proportionally to the shares held. The members of a family SCI do not benefit from the dissociation of the company if it is indebted. The debts are distributed according to the number of shares of the members.
A family SCI will also require a great deal of management. Proper bank accounts must be kept, proof of its operation must be provided punctually and general assemblies must take place regularly.
For its creation, it is necessary to draft the statutes, request the publication of the legal announcement and proceed with the registration with the clerk of the commercial court (Greffe du Tribunal de Commerce). The legal announcement and registration costs are close to 315 EUR . The other costs depend on the steps taken. For the drafting of the statutes with a Notaire or a lawyer, it is necessary to count between 800 and 2 500 EUR. There are legal platforms that offer lower rates, but these are not public or ministerial officers.
The members can decide to tax the SCI on income tax (IR) or corporation tax (IS). IS taxation often proves to be more advantageous than IR taxation as income from the rental of property held in an SCI is subject to the progressive scale of income tax.
To sell a property held in the family SCI, a resolution must be submitted to the general assembly. If all the members agree to sell, the sale of the property takes place normally. On the other hand, if a disagreement between the members exists, those who wish to sell the property have the possibility of selling their shares, while the others can keep theirs. In both cases, the selling partners are subject to taxation of their capital gain, calculated by making the difference between the sale price and the initial acquisition price (initial acquisition costs included). Note that the sale of the property does not lead to the dissolution of the SCI.
In case of divorce, there is no mandatory dissolution of the family SCI. The spouses remain associates and the family SCI remains owner of the real estate asset(s). Only property belonging to one or both spouses must in fact be liquidated.
It is important to take great care of the drafting of the statutes of the family SCI. A professional (Notaire or lawyer) will help you to add specific rules applicable in the event of future disagreements between the members.
When applying for a mortgage, your application will be handled as a commercial loan by the lender with a possible rate increase and a mortgage duration limited to 15 years. Our dedicated team of brokers can help you to negotiate these terms and determine your mortgage capacity for your purchase in France.