Very useful to transmit the family heritage, the flexibility of the real estate company also allows you to escape the constraints of joint ownership or co-ownership.
there are those who seek to anticipate the transmission of their heritage, those who were concerned to protect their partner in the event of death or those who want to prevent future disagreements between their heirs…
These cases are very different from each other, but their protagonists can all consider creating a company (société civile immobilière (SCI). More and more families – blended or not – of groups of friends or investors to create a SCI in the context of managing, more or less in common, a heritage of real estate over the long term.
civil society involves at least two people. Regarding the legal formalism, two points are paramount for ensuring its success. First of all, be sure to define the purpose of the SCI, that is to say, which is why it is created. “His definition is important, because you do not return to the social object at least to convene a new general meeting between the partners “, underlines Xavier Fromentin, notary public, member of the Groupe Monassier, in Treillières, Loire-Atlantique.
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This social object determines the powers of the manager. “It will not be able to act beyond the corporate purpose established “, specifies Jean-Michel Boisset, notary public in and Breakfasts-the Proud, in the Calvados.
A tax choice
Without any specific option, the SCI is subject to tax on the income. The potential revenues generated by the company are taxed directly to each member in the category of land revenue. The loan interests, the costs of security, repair and maintenance, capital improvements, management fees, property taxes and insurance premiums are deductible from such income. Another option : opt for the corporate income tax. In this case, the company can depreciate the building, it is deducted each year of its income a portion of the building. The benefits are taxed at a rate of 15 % on the 38 first 120 euros, and then to 33.33 % above. If the tax revenue can be advantageous for large estates to eliminate a good portion of the rental income, it must be borne in mind that the taxation regime of capital gains on real estate is much less ! In the event of a sale of the property, the capital gain is determined from the acquisition price, after reinstatement of the depreciation and without deduction for the holding period. It is then taxed as income. A solution to be avoided in order to purchase and resale.
The second key point is to draft the articles of association of the company. If the writing is free, it is all the more delicate, must be well designed to serve the objectives pursued. There are many articles types on the Internet, but it is advisable to be guided with moderation, the whole point of SCI is to make the “tailor-made” according to each situation, each form of heritage. So it is best you approach a legal professional. You can manage your real estate company alone. But you have to keep up to date accounting, which differs depending on the taxation regime, an SCI to choose its tax system (see box above). To entrust the creation of the SCI to your notary or your lawyer, plan on around 2 000 euros fee. Here are five good reasons why you should start.
Arrange for the transmission to his children and retain the ability to manage their accommodation, or even to sell
who . For parents who wish to anticipate the transmission of their heritage, in order to minimize the inheritance tax that their offspring would have to pay for the day. But while wishing to keep a stranglehold on their property to manage as they please. This assembly can be useful regardless of the number of real estate, in the presence of children.
interest. Has the difference of settlement of joint ownership, the articles of association of the SCI enable you to entrust sweeping powers to the manager. Thus, the parents, often referred to as co-managers, can be assigned to multiple functions, such as those to work, maintain the property, to hire, to continue to collect the rent and even sell them !
the other advantage of the SCI ? It promotes transmission over water. The division of a building into shares allows you to give units up to 100 000 euros tax-free. This is the deduction on gifts between parent and child, which reconstitutes itself every fifteen years. And as the units of SCI all have the same value, their possible valorization of benefit to all the partners. Finally, the shares bear rights less than if the goods were transmitted live. “Instead of being taxed on 100, you will be taxed on 70, indicates Xavier Fromentin.
Crumbled into shares, the property held by the SCI loses its market value because of the lower liquidity. “The value of the units is also reduced by the liabilities of the company. The rights of transmission of property of a value of eur 500 000, financed by a bank loan of 200 000 euros will be calculated on 300 000 euros.
Finally, in terms of imp&taxes;t de solidarité sur la fortune (ISF), the value of the units enjoys a tax allowance of 10% to 15% to compensate for lower liquidity compared to a well held live, supposed to sell more quickly.
Our advice . If you want to keep a check on your heritage, give the bare ownership of the shares to the children allows you to retain the usufruct, therefore, to continue to receive the income. Remember to write the by-laws in order to grant you broad powers, to secure the required majority for such or such an act, and inserting the approval clauses regulating the entry of new associates into the SCI. The law leaves latitude in the drafting of these clauses. Be aware, also, that, like a sale, the contribution of a property to an SCI results in the taxation of capital gains on real estate.
To organize the common use of a well, a SCI is more flexible than a co-ownership agreement, and provides greater stability
For that. To the heirs wishing to retain a family patrimony on the occasion of a succession, a family home, for example. A civil society may be concluded for 99 years. What to consider the detention of the property over the long term.
interest. The SCI allows you to escape from the joint, a situation in which, most often unknowingly, of the heirs. Right holders were keen to keep property in the family patrimony have every interest to consider to create a SCI. In fact, according to article 815 of the civil Code, ” no one can be forced to remain in indivision “. In other words, any owner may decide to pull out of a joint ownership of the day to the next. Therefore, at least to redeem the part of him who wishes to withdraw, the only solution is to sell the property.
this instability adds to the heaviness of the operation. Any act out of the management and maintenance of the property – the sale, lease, work and even a change of tiles ! – requires unanimity of the joint owners. Blockages are common and can only be removed by the use of the judge. If a co-ownership agreement, renewable every five years allows you to set certain rules – the rights of various interest holders, the assets in joint ownership, the terms and conditions of use of each property, the name, if any, of a manager – he must always reckon with the straitjacket of unanimity. Conversely, the manager of a CIS may decide all matters relating to the maintenance of the building, the work, the rental. If the partners can get out of the SCI, they can not transfer their shares only with the consent of the other, according to article 1861 of the civil Code. They have a priority right to redeem the shares of outgoing, the articles of association of the company determining the modalities of exercise of this right. As explained Xavier Fromentin, ” the statutes may provide for a period of time to redeem the shares of those who wish to exit in order to enable the SCI to return by subscribing, for example, a credit to redeem units “.
Our advice. in Addition to the articles, the powers of the manager, the majority rules and the clause of approval to write, you can also determine the weeks of occupation of the property by each partner.
For partners and to maintain the principal residence in case of death of the other
For that. For cohabitants wishing to avoid that the survivor finds himself driven out of their main residence in the death of one of them.
interest. If you buy a property with your partner, the purchase is usually done in co-ownership. The property belongs to each in proportion to his contribution. This solution has a major drawback. In the event of the death of one of the undivided co-owners partners, the heirs of the partner who died will be owners in indivision with him. They will thus be able to force him to sell. And, in the case of cohabitation, the inherited assets are taxed at 60 %.
The constitution of an SCI enables you to transmit the property to his common-law spouse surviving, while avoiding the inheritance tax of 60 % applicable to foreign persons. Provided, once the company created, proceed to the ” break-up cross units “. This legal mechanism is to be exchanged respectively the usufruct of the units of each. Mr has the units 1 to 50 of the SCI. It in exchange for the usufruct against the one of the units 51 to 100 belonging to Madame. Therefore, it is bare owner of shares 1 to 50 and a beneficial owner of the units 51 to 100.
And vice versa for the ladies. When the death of a partner, the survivor regains full ownership of the shares which it had disposed of the usufruct, without any inheritance tax to pay. And on the other half, it retains the usufruct. He has the right to use the entire housing for the rest of his life. Only it escapes the bare ownership of the shares of the deceased. If the bare ownership of the shares of the deceased is passed to his heirs, this does not give them the power to force the sale of the home, or require that the surviving leaves.
Buy more, between friends, and escape the gravity of the functioning of a co-ownership
For that. You want to buy a building several ? Manage it via a SCI allows you to avoid the copproperty, whether it’s to cut out the building to live in or to rent out.
interest. If the property purchased consists of a number of premises, we may constitute a ” company award “, a SCI special status. What is the principle ? Each partner has the exclusive enjoyment of one of these premises, corresponding to a number of units are numbered, for example 1 to 50 in a capital of 100 units. The associated write up a descriptive statement of division delineating the various parts of the building, distinguishing between those that are common to those units.
Each associate can make improvements in its housing, which will only increase the price of its own shares contrary to the rules of valuation of a SCI ordinary. In a condominium classic, each can sell his slot to which it seems appropriate, then, that the partners of a firm of award have the power to control any new arrival in the company. A definite advantage for those who remain… but a constraint for the starters.
Our advice. To avoid the cascades of costs, it is better to make purchase directly by the civil society. Because, like a sale, the contribution of a well to the SCI results in the taxation of the capital gain. Compared to a SCI-ordinary, the lending options are expanded, in particular through the housing savings. Attention, the furnished rental is not possible via a SCI. In the articles of association, the friends must set out the conditions of maintenance of the property, without giving too much power to the management.
Protect his private property from his creditors, and, as a bonus, receive a tax benefit for its business premises
who . Hold by means of a real estate company the professional premises of a business enables an entrepreneur to transfer a part of his business assets to his private assets. “Regardless of the activity, the SCI is a good way to protect themselves for any risk activity, you are a lawyer, pharmacist, doctor, etc,” said Pierre Lemée, notary in Pont-l’evêque in Calvados.
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interest. Specifically, the part operating is hosted by an operating company (SARL, SA, SCP, etc), while the buildings intended for the exercise of the activity are housed within a SCI. The real estate being housed in a separate company, the creditors of the company professional will not require the seizure of these assets in the event of financial difficulty of it. It is a way of protecting the family heritage of professional risks.
Our advice. Create a SCI and accomodate its heritage professional is also a way to be lessee of the premises, vested in its activity. So it is tax-advantaged ! Attention, on this last point, you can’t fix a rent that is too low. It must be in accordance with the rental value of real property. If this is not the case, the tax authorities may challenge the reality of the rental and the allocation of deficits on the overall income of associates, and check that there is no confusion of patrimony between the professional corporation and the real estate company. And, in case of financial difficulty, the creditors of the company will be able to estimate that the real estate company is fictitious and the Administration may reclassify it as such.