Choosing the structure for the purchase

When buying property in France, most Americans will purchase in their own name. This is the simplest option and works well for the majority of main homes and second homes. 

However, some buyers – particularly families buying together or those thinking about long-term ownership – may consider buying via a French property-holding company known as a Société Civile Immobilière, or SCI.

Both approaches are common in France.

Buying in your personal name

Buying in your own name is straightforward and usually involves fewer administrative obligations. Ownership is clear, ongoing paperwork is limited, and selling the property later is generally uncomplicated.

For couples or families, French law allows ownership to be structured in different ways (for example, equal ownership or defined shares), which can be adapted to personal circumstances with the help of a notaire. For most buyers – particularly those unfamiliar with French legal and tax systems – this route offers clarity and flexibility.

What is an SCI?

An SCI (Société Civile Immobilière) is a French legal structure designed specifically to own and manage real estate. Instead of owning the property directly, the buyers own shares in a company, and the company owns the property.

SCIs have existed for decades and are widely used, particularly within families. They are commonly used to hold a second home or a property bought jointly by several people. In some cases, they are also used for long-term rental investments.

One advantage of an SCI is that it avoids direct co-ownership of a property. The rules for managing the property – such as who makes decisions and how costs are shared – are set out in the company’s statutes. One or more shareholders can be appointed as managers (gérants), which can make day-to-day administration simpler.

SCIs and family inheritance planning

SCIs are often used as part of family inheritance planning. Rather than passing on a property itself, parents can gradually transfer shares in the company to their children, often using the tax-free gift allowances (currently €100,000 per parent per child every 15 years).

This can be combined with a legal arrangement under which parents retain the right to use the property or receive rental income (called the usufruit), while children hold the long-term ownership rights (nue-propriété). Over time, this can allow value to be passed on efficiently, within France’s gift and inheritance tax rules.

Where a couple own their main home via an SCI, arrangements can also be made so that on the death of one spouse, SCI shares of the deceased can be similarly split, so as better to provide for the survivor (see here for more about this).

For families with stable long-term plans, this can therefore be an effective way of organizing ownership across generations.

Note, however, that an SCI does not allow families in France to avoid French intheritance tax or ignore French heirship rules.

Points to be aware of

An SCI is not a one-size-fits-all solution. It involves more paperwork than personal ownership, including company registration, basic accounting and ongoing tax declarations. Decisions made when setting up the structure can have long-term consequences and may limit flexibility later on.

SCIs are generally less well-suited to situations where the owners expect to buy and sell property frequently, or to use the property for short-term holiday rentals. They are also not always ideal if owners’ personal or financial circumstances change significantly over time.

For these reasons, notaires often stress that an SCI should be created for a clear purpose, rather than simply because it is commonly used in France.

Taxation of SCI - IR Regime

An SCI is normally taxed under the income tax (IR) regime, meaning profits are not taxed at company level but are declared directly by the shareholders in proportion to their shares. 

In such a system, capital gains on resale benefit from the same time-based reliefs as individuals (full exemption from capital gains tax after 22 years and from social charges after 30 years). 

Taxation of SCI - IS Regime

However, an SCI can opt for corporation tax (IS), in which case the company itself pays corporation tax on rental profits and resale is taxed on the accounting gain without access to the long-term capital gains exemptions available to individuals. 

Under such a system, the property can also be depreciated annually.  Depreciation reduces taxable profits during ownership but increases the taxable gain on resale.

Shareholders are also personally liable to pay tax on dividends, for any funds that are distributed.