SCI Capital Gains Tax: FAQ

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An SCI (Société Civile Immobilière) is a common French legal structure for acquiring and managing real estate assets. Capital gains can be realized when you sell property or shares held within the structure. How are these gains taxed, and what exemptions are available? Winter Immobilier explains the key aspects of capital gains taxation in an SCI.

How do you calculate capital gains in an SCI?

In an SCI, capital gains correspond to:

• The difference between the value of social shares at acquisition and their sale price
• The difference between the price at which the company purchased a property and its resale price

What amounts are included in the sale price for SCI capital gains calculations?

For capital gains calculation purposes, the sale price of property or social shares by an SCI is the amount stated in the deed of sale or transfer. Certain costs can be deducted from this sale price, which reduces the taxable capital gain:

• Real estate agent commission
• Mortgage discharge fees
• Mandatory technical inspections (energy performance certificate and others)
• Architect fees
• Any compensation paid to a tenant vacating the property
• VAT paid

What amounts are included in the acquisition price for SCI capital gains calculations?

The acquisition price is the amount actually paid by the SCI or by the selling partner to purchase the property or social shares. This amount can be increased by costs and charges to reduce the taxable capital gain. Actual acquisition expenses can be added to the acquisition price with supporting documentation. Alternatively, you can elect a flat-rate increase (7.5%). If the property is sold more than 5 years after acquisition, renovation costs can also be added to the acquisition price, either at actual cost (with contractor invoices) or using a flat-rate increase of 15%.

What is the tax regime for capital gains realized by an SCI?

The tax treatment applied to capital gains realized by an SCI depends on the company's tax status: IR (impôt sur le revenu, income tax) or IS (impôt sur les sociétés, corporate tax).

Capital gains will be subject to IR (income tax) if the SCI operates under the partnership tax regime (the default regime for an SCI). The net capital gain (after any applicable reductions) is taxed at 19%, plus a supplementary tax if the gain exceeds €50,000.

Capital gains will be subject to IS (corporate tax) if the partners have elected to have the SCI taxed as a corporate entity. A flat corporate tax rate of 25% applies.

What exemptions are available for an SCI taxed under IR?

Like individuals, an SCI can benefit from exemptions on capital gains tax from real estate sales in the following circumstances:

• The property sold is the primary residence of one of the SCI's partners (the exemption applies only to that partner's share of the capital gain)
• It is the first sale of a property that is not a primary residence, and the partner benefiting from the exemption on their share has not owned a primary residence for the past 4 years
• The property sale occurs as part of urban or rural land consolidation operations
• The sale benefits a social housing organization or a company committed to leasing social housing
• The sale price of the property is less than €15,000

What reductions are available for an SCI taxed under IR?

After 5 years of holding a property, an SCI benefits from reductions on the taxable capital gain amount. This reduction begins at 6% for each year of ownership starting from the 6th year. By the 22nd year, the reduction is 4%. After 22 years of ownership, the capital gain is therefore fully exempt.

Capital gains from real estate held in an SCI under the IR regime are also subject to social levies. Reductions linked to the length of ownership apply at 1.65% per year from the 6th to the 21st year, 1.60% in the 22nd year, then 6% thereafter. Full exemption from social levies is achieved after 30 years of ownership.

What exemptions are available for an SCI taxed under IS?

The IS regime does not allow an SCI to benefit from reductions or exemptions on taxes applied to real estate capital gains. The capital gain realized by the SCI on a sale is taxed like the company's ordinary taxable profit. Furthermore, a partner receiving dividends following a property sale by the SCI increases the taxable base for their personal income tax.

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