SCI to IR or IS: taxation, resale and choice criteria

How is an SCI imposed on the IR? In an SCI with IR, the company does not pay tax directly on its profits. Each partner is taxed on his share, even if the rents remain in the company.

For an individual associate who rents an empty property, this income is taxed as property income and is added to his other income. They also pay social security contributions. Under certain conditions, a land deficit can be charged against overall income up to €10,700 per year, excluding loan interest.

This regime can therefore result in taxation even when the partners do not actually receive the rent. Legalstart explains the differences between SCI à l'IR and SCI à l'IS and supports partners in the formalities for creating their company. What are the advantages of SCI over IS?

With the IS option, the company itself pays tax on its profits. In 2026, the standard rate is 25%. A reduced rate of 15% applies to the first €42,500 of profit, subject to conditions, in particular turnover and capital holding.

The interest of the SCI in the IS lies in particular in the possibility of depreciating the real estate. The company can deduct part of its value from the taxable result each year, which reduces the profits subject to tax. Land, on the other hand, is not depreciable.

The SCI may also deduct certain expenses, such as loan interest, management fees, insurance premiums and maintenance expenses, subject to applicable tax rules. Profits retained in the company are subject to corporate tax, but their distribution results in additional taxation among the partners, in respect of dividends. In 2026, these are in principle covered by the single flat-rate levy (PFU) of 31.4%, except for the option for the progressive income tax scale.

This operation may suit partners who wish to reinvest rents in new projects or repay a loan. The benefit of this regime, however, depends on their tax situation and their strategy for holding the property. What tax on resale?

The difference between the two regimes is particularly important when selling the property. In the IR, the capital gain falls under the regime of individuals. It is taxed at 19% for income tax and 17.2% for social security contributions, before application of reductions linked to the length of ownership.

Exemption from income tax is acquired after 22 years of ownership, and exemption from social security contributions after 30 years. Under the IS, the capital gain corresponds to the difference between the sale price and the net book value of the property, that is to say its cost price less depreciation charged. Reductions for length of detention do not apply.

Machine-translated from French