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Buying a second home through an SCI: how does it work?

When buying a second home, many investors choose to create an SCI, an advantageous alternative in many respects. However, buying a property via an SCI has a number of specific features that you should be aware of before you start. Definition, functioning, applicable taxation, advantages and disadvantages... We tell you everything about buying a second home with an SCI.

What is an SCI ? Definition and functioning 

An SCI (Société Civile Immobilière) is a legal structure that holds one or more real estate assets. The SCI is made up of at least two partners. Each of the partners holds shares in the company, proportional to their contribution to the business. The real estate is thus bought and administered by several partners, via the SCI, a legal entity.

When to choose the SCI to buy a second home? 

The choice of the SCI is relevant in many cases, whether it is for the purchase of a second home, a main home or for a rental investment project. Creating an SCI is possible when two or more people have a common project to buy a property, such as a second home. For example, you can create a non-trading property company with your spouse, friends or family members (parents, siblings, children, etc.) - this is called a family non-trading property company. The second home can then be shared between the different partners andrented out when it is unoccupied. The rental income generated will be received by each partner in proportion to the shares held in the non-trading company. 

Creating an SCI to buy a second home: advantages and disadvantages 


Creating an SCI to buy a second home has many advantages, although there are also some limitations to be aware of. 

The advantages of the SCI to buy a second home 

Here is an overview of the advantages of the SCI to buy a second home:  

  • You can obtain a real estate loan more easily. Indeed, banks are often more inclined to grant financing to companies than to individuals.

  • You can invest in more valuable assets, thanks to the greater contribution of the various partners.

  • You have the possibility to resell your shares at any time (to another partner or to a third party), in proportion to the amount initially invested.

  • The transfer of property during one's lifetime is facilitated and the transfer costs are attractive: parents can, for example, transfer their shares to their children and benefit from deductions of up to €100,000 per child for each donation, renewable every 15 years.

  • There is no risk of conflicts linked to the joint ownership system (this system, which is usually in force when several people purchase a property, is not applied in the case of an SCI; this avoids disagreements when the property is divided between several beneficiaries in the event of separation or death).

  • If you are a non-resident, buying a second home through an SCI can greatly simplify the acquisition and financing of the property.

  • You benefit froman advantageous tax system, with, in certain cases, a deduction of expenses (work, property tax, management fees...).

  • ... 

What are the disadvantages of using an SCI to buy a second home?

In spite of these numerous advantages, the purchase of a second home through a non-trading property company also presents some constraints. First of all, it is important to know that the responsibility of the partners within a SCI is what is called "indefinite and unlimited". In other words, if debts are contracted within the company, each partner will have to pay them, in proportion to his contribution to the capital. In SCI, the personal assets of the partners are also engaged.

In addition, the creation and management of an SCI, although relatively simple, requires some administrative steps that are a bit tedious: drafting the articles of association, choosing the manager, depositing the share capital, publishing a legal announcement in an official newspaper, registering with the RCS (Registre du Commerce et des Sociétés)... Finally, the setting up of a non-trading real estate company also generates some costs of creation. On average, you should expect to pay 1,500 euros in fees when you set up your SCI to deal with the various administrative formalities. 

How to buy a second home with an SCI ?

The real estate company obeys more or less the same modalities of creation and management as a classic company: 

1. Draft the bylaws, including the following: 

  • the name of the company
  • the legal form 
  • the life of the company
  • the purpose (the nature of the activity)
  • the amount of the share capital
  • the address of the head office 
  • the contributions of each partner
  • the name of the manager

2. Publish a notice of the creation of the real estate company in a legal newspaper.

3. Register the company in the Trade and Companies Register (RCS) at the clerk's office of the Commercial Court, in order to obtain the Kbis extract.

Each partner then invests a contribution in the company's capital and obtains a proportional number of shares in return. The debts, as well as the profits that will be made with the secondary residence held by the SCI, will have to be divided between the different partners in proportion to the shares invested. It should also be noted that, in order to proceed with the transfer of the property, it will be necessary to obtain the agreement of the majority partners, at least. Moreover, no minimum starting capital is required to create an SCI. Contributions can be made in kind or in cash.

Whether you are buying a second home in your own name or through an SCI, it is essential to surround yourself with professionals to secure your real estate purchase. At Mansio, we accompany you at each step of the purchase of your second home, from the search for properties that meet your criteria to rental management, including renovation and furnishing, for a 100% turnkey investment!

Buying a second home with an SCI: what is the tax treatment?

There are two possible tax regimes for the purchase of a second home through a SCI: income tax and corporate tax.

- Income tax (IR) 

If no profit is generated by the property held by the SCI (for example, if the property is simply made available to the partners for residential use free of charge), the partners will not have to declare any income. They will simply have to fill out the 2072-S-SD return when they create the non-trading property company. However, if income is generated by the rental of the secondary residence, each partner will have to declare the income received individually, in proportion to the shares he or she owns in the partnership. If the rental income exceeds 10% of the total amount, then corporate income tax must be chosen.

- Corporate tax (IS) 

Corporate income tax applies automatically from the moment the secondary residence is rented out furnished (regardless of the duration of the rental period). A SCI subject to corporate income tax will have to file a tax return, even if the property does not yet generate rental income. If dividends are paid to the partners, they will have to pay a dividend tax. In addition, in the event of resale, the partners will have to pay a tax on the capital gains generated.

Note: expenses (maintenance costs, property tax, insurance, work, rental management costs, etc.) can be deducted from the income to be declared for tax purposes, which will reduce the tax liability of the SCI.

To learn more about the taxation of second homes, see our article on the subject.

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