Around 30% of our investor clients buy in Paris through an SCI (Société Civile Immobilière, a French civil property company). It is neither a magic formula nor a compulsory step: it is a legal tool that solves specific problems. Used well, it eases estate planning, protects partners and gives flexible ownership. Used badly, it costs money, adds complexity and can even worsen the tax bill.
In 15 years of property hunting and over 1,200 transactions, I have seen brilliantly structured SCIs enable smooth family wealth transfers, and hastily created SCIs become legal nightmares at the first disagreement between partners. The difference rarely lies in the SCI itself. It lies in the quality of the advice taken at the outset.
This guide explains when an SCI makes sense for buying in Paris, how it works, what it costs and the pitfalls you absolutely need to know. It does not replace the advice of a notaire or a tax lawyer: it gives you the keys to ask them the right questions.
The SCI in 60 seconds
A Société Civile Immobilière is a legal structure that lets two or more people jointly own one or more properties. Instead of buying an apartment in your own name (or in joint ownership), you create a company that buys the property. You hold shares in this company, not the property directly.
This puts a layer between you and the property, and it is that layer which gives flexibility. Company shares can be sold, donated, or split between bare ownership and usufruct more easily than a property held directly. The articles of association set out each partner’s rights and obligations with a freedom that joint ownership (indivision) does not allow. Management is entrusted to a manager named in the articles, which avoids the unanimity that joint ownership requires.
Two tax regimes are available: IR (income tax, the default regime) and IS (corporate income tax, by election). This choice is fundamental and virtually irreversible: once you opt for IS, you cannot go back. Everything else follows from it.
Who should actually use an SCI?
The SCI is not a universal tool. It addresses specific situations. Here are the cases where it is fully justified in Paris.
Unmarried couples
This is the most common use case, and historically the most frequent. Under joint ownership (indivision), any co-owner can force a sale at any time. On a separation, that means a forced sale at the worst moment and the worst price. The SCI lets you draft articles that organise a partner’s exit without forcing a property sale: approval clauses, buyback terms, a predetermined buyback price.
For an unmarried couple buying an apartment in Paris, often the biggest investment of their lives, the SCI provides legal security that joint ownership cannot. The creation cost (1,500 to 3,500 euros) is negligible against the amounts at stake.
Family estate planning
This is the second major advantage of the SCI, and often the most financially powerful. Instead of transferring a property (indivisible by nature), you transfer company shares (divisible and precisely valued).
The classic mechanism: parents create an SCI, buy a property, then gradually donate shares to their children. Each parent can give up to 100,000 euros per child every 15 years free of gift tax. By combining split ownership (donating bare ownership while keeping the usufruct) with the tax allowances, you can transfer substantial property wealth with reduced or even zero tax.
SCI shares also carry a valuation discount, generally 10 to 20%, because they are less liquid than a property held outright. This discount further reduces the taxable base for gifts.
For a Paris apartment worth 500,000 or 800,000 euros, estate planning via an SCI with split ownership can save tens of thousands of euros in inheritance tax compared with a direct transfer.
Group investment
When two friends, siblings or business partners want to invest together in Paris property, the SCI is the natural tool. It lets you set out precisely the share allocation (not necessarily 50/50), the decision-making rules, the terms for a partner’s entry and exit, the manager’s remuneration and the profit-distribution policy.
Joint ownership between non-family members is a legal time bomb. The SCI defuses it.
Foreign buyers
For a non-resident buying in Paris, the SCI can simplify certain legal and tax aspects, notably inheritance (in some configurations, applying the law of the country of residence rather than French inheritance law). This is a complex subject that calls for specialist international tax advice, but the SCI is often part of the solution.
SCI under IR vs SCI under IS: the choice that changes everything
This is the most consequential choice in the whole process. It determines how rental income is taxed, how capital gains will be taxed on resale, and how the accounting works. Once the IS option is exercised, there is no going back.
The SCI under IR (fiscal transparency)
This is the default regime. The SCI is “transparent” for tax purposes: it does not pay tax as an entity. Each partner is taxed on their proportional share of the results, in the rental income category.
In practice, it is as if you held the property directly, but with the legal flexibility of the SCI. You have the same tax regime as direct ownership with unfurnished letting: micro-foncier or actual expense regime, deductible rental deficit, duration-based allowances on capital gains on resale.
Advantages: simple accounting (no balance sheet, just a 2072 declaration), private individual capital gains regime on resale (progressive allowances, full exemption after 22 years for income tax), no double taxation.
Disadvantages: no depreciation of the property (unlike LMNP or the SCI under IS), taxation at income tax rates plus social contributions on rental income, no possibility of furnished rental (risk of reclassification as commercial activity and forced switch to IS).
The SCI under IS
By election, the SCI can be subject to corporate income tax. It then becomes an autonomous fiscal entity: it files its own results, pays IS on its profits, and partners are only personally taxed when they receive dividends.
Advantages: possibility of depreciating the property (like LMNP, but through the company structure), deduction of all expenses including some that IR does not allow, IS rate of 15% on the first 42,500 euros of profit then 25% beyond, possibility of furnished rental without issues.
Disadvantages, and they are significant:
The major pitfall of the SCI under IS shows itself at resale. The capital gain is calculated on the difference between the sale price and the net book value, that is, the purchase price minus all depreciation taken. After 15 years of depreciation, the net book value can be very low and the taxable gain enormous, even if the property has risen only modestly in market value.
Simulation: capital gains SCI IS vs IR after 15 years
Property purchased for 400,000 euros in an SCI, sold for 520,000 euros after 15 years
SCI under IR:
- Gross capital gain: 120,000 euros
- IR allowance (15 years of ownership): 60% -> taxable gain for IR: 48,000 euros
- Social contributions allowance (15 years): 25.5% -> taxable gain for SC: 89,400 euros
- Income tax (19%): 9,120 euros
- Social contributions (17.2%): 15,377 euros
- Total tax on capital gain: approximately 24,500 euros
SCI under IS:
- Cumulative depreciation over 15 years: approximately 160,000 euros (estimate)
- Net book value: 400,000 - 160,000 = 240,000 euros
- Taxable capital gain: 520,000 - 240,000 = 280,000 euros
- IS on capital gain: 25% x 280,000 = 70,000 euros
- Plus distribution to partners: 30% flat tax on the distributed balance
- Total tax: potentially over 100,000 euros
The gap is striking. The SCI under IS turns an annual tax advantage (depreciation) into a heavy liability at resale. This is the classic trap: the investor who enjoys depreciation for 15 years then discovers the bill on the way out.
My view
For a rental investment in Paris with a resale horizon of 10-15 years, the SCI under IR is almost always preferable. If you want depreciation, LMNP status (non-professional furnished letting) in your own name is more advantageous (depreciation without affecting private individual capital gains).
The SCI under IS can be justified in one specific case: very long-term wealth holding (25-30 years or more), with no intention to sell, and a strategy of retaining profits within the company for reinvestment. It is a wealth-holding tool, not a standard rental investment tool. Consult a tax lawyer or a specialist notaire before deciding.
Creating an SCI: step by step
Creating an SCI is a structured process that takes 2 to 4 weeks.
Drafting the articles of association
This is the most important step, and the one where you should not cut costs. The articles set the rules of the game: share allocation, the manager’s powers, the terms for share transfers, approval clauses, dissolution procedures, distribution policy. Standard articles downloaded from the internet do not cover complex situations (disagreements between partners, death, divorce, the entry of a new partner).
Have your articles drafted by a lawyer specialising in property law or by your notaire. Cost: 1,000 to 2,500 euros depending on complexity.
Share capital
The minimum share capital of an SCI is 1 euro. In practice, a symbolic capital (1,000 to 5,000 euros) is common. The capital can be fixed or variable. Variable capital offers more flexibility for partners entering and exiting without amending the articles.
The purchase is financed not through the share capital but through a loan taken out by the SCI (with personal guarantees from the partners) or through partner current account contributions. A current account contribution has the advantage of being recoverable at any time, unlike share capital.
Formalities
Publication of a formation notice in a legal announcements journal (approximately 150 euros), registration with the Trade and Companies Register via the single window (approximately 70 euros), obtaining the SIRET number. Timeline: 1 to 2 weeks after filing the complete application.
Total creation cost
Expect 1,500 to 3,500 euros all-in (lawyer/notaire + publication + registration). This is a one-time investment, to be weighed against the property transaction amount and the benefits obtained.
Annual management obligations
An SCI under IR has light obligations: annual general meeting (even between spouses), simplified bookkeeping, 2072 tax declaration. No mandatory accountant, though it is recommended.
An SCI under IS has heavy obligations: full commercial accounting, balance sheet, tax package, accountant virtually indispensable (800 to 1,500 euros/year).
SCI and financing: what banks require
Banks do finance SCI purchases, but with specific conditions.
Personal guarantee
The SCI borrows, but banks always require a joint and several personal guarantee from the individual partners. If the SCI defaults, you are personally liable. The SCI does not shield personal assets from bank creditors: this is a persistent myth.
Rate and conditions
Loan terms are generally the same as for a direct purchase: same rate, same terms, same equity requirements. Some banks are less comfortable with SCIs and may apply a slight premium (0.1 to 0.2 percentage points). Others know them well and process the application no differently.
Borrower’s insurance
Each guarantor partner must be covered by borrower’s insurance, proportional to their share (or at 100% each for maximum coverage). This is a negotiation point that should not be overlooked.
Jean Mascla’s advice: financing through an SCI is no harder than in your own name, but you need a bank that is used to them. Our investor clients in SCIs generally use the same banks as our direct-purchase clients. We can put you in touch with brokers who know the subject inside out.
SCI pitfalls: what you are not always told
Tax abuse
The tax authorities watch family SCIs used solely to cut tax with no economic substance. An SCI created the day before a gift, with no real activity, with a property occupied free of charge by a partner paying no rent, can be reclassified as tax abuse. The SCI must have substance: a genuine corporate purpose, general meetings actually held, up-to-date bookkeeping, and rent actually collected if the property is let.
Furnished rental in an SCI under IR
In principle, the SCI under IR can only carry out civil activities, that is, unfurnished letting. If you let furnished (a commercial activity) through an SCI under IR, the tax authorities can reclassify the SCI as a commercial company and automatically subject it to IS, with all that this implies (forced depreciation, professional capital gains on resale).
A tax tolerance exists for ancillary furnished activity (less than 10% of total revenue), but it is fragile. If you want to let furnished in Paris, LMNP in your own name is the right vehicle, not the SCI under IR.
Partner deadlocks
Without well-drafted statutory clauses, a disagreement between partners can paralyse the SCI: no sale, no renovation works, no distribution of profits. I have seen a Paris property worth 600,000 euros sit unsold for years because two sibling partners could not agree on the price.
The solution is preventive: articles drafted by a professional, with conflict-resolution clauses, priority buyback rights, and mandatory mediation before any legal action.
The SCI and wealth tax (IFI)
SCI shares holding property assets fall within the IFI (Real Estate Wealth Tax) base. There is no IFI advantage to holding through an SCI rather than directly, except in very specific cases of SCIs under IS retaining profits (cash reserves are not a property asset). This is an advanced optimisation topic to discuss with a wealth management adviser.
Cumulative running costs
An SCI is not free to maintain. Each year, count: the general meeting (time), the 2072 declaration (time or an accountant), and possibly an accountant for an SCI under IS (800-1,500 euros/year). Over 15 years, the running cost of an SCI under IS easily reaches 15,000 to 25,000 euros. This has to be weighed against the benefits.
SCI or direct ownership: the comparison
To decide between an SCI and direct ownership, here are the decisive criteria based on your situation.
Buy in your own name if you are a married or civil union couple buying your primary residence, a solo investor without short-term estate planning needs, or an investor who wants to rent furnished (LMNP). Direct ownership is simpler, less costly to manage, and LMNP offers depreciation without the drawbacks of the SCI under IS.
Create an SCI if you are an unmarried couple, you have an anticipated family estate planning project, you are investing with others (friends, siblings, business partners), you are a non-resident with specific inheritance considerations, or you wish to organise the ownership of multiple properties in a dedicated structure.
Consult a notaire before deciding if you are hesitating between the two, your assets exceed the wealth tax threshold, you have a complex family situation (blended families, children from different relationships), or you are a non-French tax resident.
SCI and buying in Paris: specific considerations
The Paris market adds a few particularities to the SCI framework.
The amounts at stake
In Paris, a T2 investment property costs 300,000 to 450,000 euros. A family property in the central arrondissements can exceed one million euros. At these levels, the estate planning stakes fully justify the cost of creating an SCI. The potential savings on inheritance tax run into tens of thousands of euros, or even hundreds of thousands for the largest estates.
Share split ownership
Split ownership is especially powerful in Paris. Parents donate the bare ownership of shares to their children (value reduced by the tax scale: 50% for usufruct between ages 51 and 60, 60% between ages 61 and 70) and keep the usufruct (the right to receive rental income). On the parents’ death, the children recover full ownership with no further inheritance tax. For a Paris property worth 800,000 euros, with two parents aged 55 and two children, the bare ownership transfer via an SCI can be done virtually free of tax thanks to the allowances.
Partner current accounts
Financing the equity contribution through a partner current account rather than share capital is common and sensible in Paris. The current account is recoverable: if you put in 80,000 euros as a current account and the SCI sells the property, you recover your 80,000 euros before any profit is distributed. This is added protection, especially between non-family partners.
Our investor clients in SCIs account for around a third of our transactions. Our property hunters regularly work with notaires and tax lawyers to structure SCI purchases in the best way. Structure your investment with Home Select: we coordinate everyone involved so you have a single point of contact.
Key takeaways
The SCI is a powerful tool for buying in Paris, provided it is used for the right reasons. It excels at protecting unmarried couples, planning a family estate ahead of time, and group investment. It is counterproductive for a primary residence as a married couple, for furnished letting (prefer LMNP), or when created with no genuine legal need.
The IR/IS choice is the most consequential decision. In Paris, for a rental investment with resale envisaged within 10-15 years, the SCI under IR is almost always preferable: capital gains taxed under the private individual regime remain far more favourable than the professional capital gains of the SCI under IS.
The creation cost is modest (1,500 to 3,500 euros) against the amounts at stake in the Paris market. But never skimp on having the articles properly drafted by a professional. The 2,000 euros for a lawyer today may save you 50,000 euros in litigation tomorrow.
Are you considering an SCI purchase in Paris? Discuss your project with our team. Our 16 property hunters identify the property, negotiate the price, and put you in touch with notaires and tax lawyers experienced in SCI purchases in the Paris market. First consultation free, fees 100% on success.
Frequently asked questions
How much does it cost to create an SCI to buy in Paris?
Creating an SCI costs between 1,500 and 3,500 euros with a lawyer or notaire for drafting the articles of association, plus approximately 250 euros in registration and legal publication fees. It is possible to draft the articles yourself to reduce costs, but this is strongly discouraged: poorly drafted articles can create deadlocks in the event of disagreements between partners or inheritance situations.
Can you buy your primary residence through an SCI?
Yes, it is legally possible, but rarely advantageous. You lose the capital gains tax exemption on resale (reserved for primary residences held directly), you cannot access certain first-time buyer loans, and the SCI taxed under corporate income tax (IS) means capital gains are taxed without the duration-based allowances. An SCI for a primary residence only makes sense in very specific cases, particularly for unmarried couples wishing to organise ownership flexibly.
SCI under income tax (IR) or corporate tax (IS): which regime to choose for investing in Paris?
The SCI under IR is fiscally transparent: each partner is taxed on their share of rental income, as if they held the property directly. The SCI under IS allows depreciation of the property and deduction of more expenses, but capital gains on resale are calculated on the net book value (after depreciation), which generates very heavy taxation. For a rental investment in Paris with a likely resale horizon of 10-15 years, the SCI under IR is usually preferable. For very long-term wealth holding without planned resale, the IS option may be justified.
