Owning the main residence through a non-trading property company (SCI) may cause the owner to lose certain civil and tax advantages that he would enjoy if he owned it directly.

Thus, the spouse may lose, if he or she is not a partner, the benefit of the protection on the family home. He or she has no occupancy title or right to a lease, so the other may, without the spouse’s consent, sell the dwelling or evict him or her. The establishment of a SCI may also deprive the surviving spouse of the benefit of the right of temporary enjoyment of the dwelling (for one year after death) and of the lifetime right of use and habitation, because he or she is neither the owner nor a tenant in the absence of a lease.

When you have a real estate project and you want to create a SCI, the protective measures for real estate borrowers do not apply: the ten-day cooling-off period, maintaining the offer for thirty days, cancellation of the borrower’s insurance (cancellation during the first year and annual cancellation), because the SCI is treated like a professional.

It should also be remembered that one loses the 20 per cent inheritance tax allowance and the 30 per cent property wealth tax allowance.

While putting one’s main residence in a Société civile immobilière (SCI) may present advantages, particularly in terms of transmission, this is not the case with regard to the Wealth Solidarity Tax (ISF), as the Constitional Court has just pointed out

The Constitutional Court confirms the constitutionality of the article of the General Tax Code which grants only to owners holding their home as their main residence a 30% reduction on the market value of this property, for the calculation of the former wealth solidarity tax (ISF). Taxpayers who hold their dwelling through a non-trading property company are not entitled to this tax advantage. The same position should also apply to the IFI (Property Wealth Tax).

[May 2020]