Wealth & structuring
The same property, held differently, does not have the same consequences
A high-end new-build home is not just a purchase: it is a piece of your wealth, with its tax and succession effects. Here, without jargon, is what an SCI, split ownership, the IFI and succession really involve — and where our role ends.
To structure is to decide how to hold
Buying new-build is one thing; deciding in whose name, in what form and for whom to pass it on is another. Structuring does not change the property: it changes how it is held, taxed and passed on. This page gives you the markers to arrive prepared at your notaire’s office. It informs; it does not replace: every structure is decided and drafted with them.
Ownership
Personal ownership or an SCI: in whose name to hold the property
The first decision is not ‘which property’, but ‘how to hold it’. In personal ownership, you own the building directly. Through an SCI (a French property-holding company) taxed under the income-tax regime, it is the company that owns the property, and you own the shares. An income-tax SCI is fiscally transparent: its rents are taxed in the hands of the partners, at your own rate, exactly as with direct ownership. Its point is therefore not tax: it lies in the flexibility of passing on shares and in shared management — never in a lower tax bill.
What to remember
- An income-tax SCI is transparent: its income is taxed in the partners’ hands, at the same rate as direct ownership.
- Its point is passing on shares and managing jointly, not a tax saving.
- Placing your main home in an SCI loses the 30% allowance it enjoys for the IFI under direct ownership (art. 973 CGI).
What it involves
- An SCI has to be set up — articles, registration, publication in a legal gazette — then maintained over time: accounts, an annual meeting, an annual tax return. All of them recurring costs.
- The partners’ liability for the company’s debts is unlimited, in proportion to their shares (art. 1857 of the Civil Code).
- An SCI with no genuine corporate life, or set up mainly for tax purposes, is exposed to reclassification by the tax authorities (abuse of law, arts. L64 and L64 A of the Tax Procedures Code).
- On new-build bought off-plan, the 20% VAT included in the price is not recoverable by an SCI letting unfurnished: it is a permanent cost, identical to personal ownership.
Two ways to hold the same property
- Profile
- Parents subject to the IFI, two children, wealth to be passed on gradually.
- Project
- New-build property (off-plan) for letting, around €700,000, with the aim of passing it on to the children.
In personal ownership
Simple to set up, rigid to pass on.
- No company to create or maintain: no articles, no accounts, no meeting.
- The property passes on in blocks; without organisation, it falls into undivided joint ownership (indivision) between the heirs, which any of them can break at any time (art. 815 of the Civil Code).
- The rents are taxed at your own rate, as in an income-tax SCI.
- Entry into the IFI base
- 100% of the value — art. 965 of the CGI
- Acquisition costs (new-build)
- around 2 to 3%
- Ownership formalities
- none
In an income-tax SCI
A framework for passing on and managing jointly, at the price of formalities.
- The transfer is made in shares, which are divisible: you can give 10%, then 30%, in stages, while keeping the management (art. 1846 of the Civil Code).
- The articles organise management and prevent the deadlocks of undivided joint ownership.
- The company must be set up and then maintained: accounts and an annual meeting, a recurring cost.
- Entry into the IFI base
- the fraction representing the properties, here equal to their value — art. 965, 2° of the CGI
- Acquisition costs (new-build)
- identical, plus the set-up costs
- Ownership formalities
- annual accounts and meeting
Whether an SCI is right for you, its articles and its tax regime are decided with your notaire or your tax lawyer.
Split ownership
Separating the usufruct from the bare ownership
A property held in full ownership can be split into two rights: the usufruct — using the property and receiving its income — and the bare ownership — disposing of it. Gifting the bare ownership to your children while keeping the usufruct lets you transfer early: only the bare ownership is taxed, and its value depends on your age (the scale under art. 669 of the CGI, below). On the usufructuary’s death, the bare owner recovers full ownership with no inheritance tax (art. 1133 of the CGI). You can split a property directly, but also the shares of an SCI, to combine the two logics.
What to remember
- Gifting the bare ownership while keeping the usufruct transfers the value at a reduced cost: only the bare ownership is taxed, according to your age (art. 669 of the CGI).
- On the usufructuary’s death, the bare owner recovers full ownership with no inheritance tax (art. 1133 of the CGI).
- You can split a property, but also the shares of an SCI, to combine flexible management with an early transfer.
What it involves
- Split ownership does not reduce the IFI: the usufructuary remains taxed on the full-ownership value (art. 968 of the CGI).
- Apportioning the IFI under the scale of art. 669 is reserved for a usufruct that arises by operation of law — for example that of a surviving spouse who elects for the usufruct of the estate (art. 757 of the Civil Code) — not for a usufruct you deliberately keep for yourself.
- Once granted, split ownership is hard to unwind without both parties’ agreement.
- The split of works between the usufructuary (day-to-day upkeep) and the bare owner (major repairs, arts. 605 and 606 of the Civil Code) should be set by deed to avoid disputes.
| Age of the usufructuary | Value of the usufruct | Value of the bare ownership |
|---|---|---|
| Under 21 | 90% | 10% |
| 21 to 30 | 80% | 20% |
| 31 to 40 | 70% | 30% |
| 41 to 50 | 60% | 40% |
| 51 to 60 | 50% | 50% |
| 61 to 70 | 40% | 60% |
| 71 to 80 | 30% | 70% |
| 81 to 90 | 20% | 80% |
| 91 and over | 10% | 90% |
Calculating the bare ownership, the deed of gift and how it fits your matrimonial regime are all handled at your notaire’s office.
IFI
The property wealth tax, in practice
The IFI (the French property wealth tax) concerns you if your net property wealth exceeds €1,300,000 on 1 January (art. 964 of the CGI); the scale then applies from €800,000. Assets are counted at 100% of their value, with no allowance — with one notable exception: the main home, which enjoys a 30% allowance if you hold it directly (art. 973 of the CGI). A point often misunderstood: the shares of an SCI enter the base only up to the fraction of their value representing the properties held, not in full where the company also holds cash or other assets (art. 965, 2° of the CGI).
What to remember
- The IFI concerns you if your net property wealth exceeds €1,300,000 on 1 January (art. 964 of the CGI); the scale then applies from €800,000.
- Assets are counted at 100% of their value, except the main home, which enjoys a 30% allowance if you hold it directly (art. 973 of the CGI).
- SCI shares enter the base only up to the fraction representing the properties held, not for their full value (art. 965, 2° of the CGI).
What it involves
- A second home enters at 100% of its value, with no allowance.
- Placing a property in an SCI does not take it out of the IFI; nor does split ownership (art. 968 of the CGI).
- Deductible debts are tightly framed: interest-only loans and family loans are subject to anti-abuse rules (art. 974 of the CGI).
Valuing your assets, computing the base and the deductibility of liabilities are matters for your tax adviser.
Succession
Passing on in stages, during your lifetime
Passing on early and in fractions most often costs less than letting the estate run its course. Each parent may give each child up to €100,000 free of tax, and this allowance renews every 15 years (arts. 779 and 784 of the CGI). Combined with the age scale (art. 669), gifting the bare ownership of SCI shares lets you transfer at a lower cost while keeping the usufruct and the management. A donation-partage (a French deed of gift and division), for its part, can fix the value of the assets as at the date of the deed, where its conditions are met, and it prevents disputes between heirs (arts. 1075 and 1078 of the Civil Code).
What to remember
- Each parent may give each child up to €100,000 free of tax, and this allowance renews every 15 years (arts. 779 and 784 of the CGI).
- Combining a gift of the bare ownership of shares with the age scale (art. 669) lets you transfer early, at a lower cost, while keeping the usufruct and the management.
- A donation-partage can fix the value of the assets as at the date of the deed and prevents disputes between heirs (arts. 1075 and 1078 of the Civil Code).
What it involves
- The tax exemption between spouses or civil partners (PACS) applies to the transfer on death (art. 796-0 bis of the CGI); it is not the same as a spousal gift (donation au dernier vivant), which is put in place during your lifetime to widen the surviving spouse’s rights.
- A PACS exempts on death but does not make the partner an heir: without a will, they receive nothing as of right.
- The share you may pass on freely is limited by your children’s reserved portion (arts. 912 and 913 of the Civil Code).
- Without organisation, a property received by several people falls into undivided joint ownership, which any co-owner can break at any time (art. 815); an SCI or a joint-ownership agreement (art. 1873-1 of the Civil Code) keeps it in check.
A gift, a donation-partage, a will, the choice of matrimonial regime: these deeds are prepared and entered into with your notaire.
Guidance, not a legal opinion
We help you understand the options and prepare your decisions, then we coordinate the parties involved. We draft no deed and replace neither your notaire nor your tax lawyer, who draw up and execute the deeds. Our wealth advice, the selection and the structuring are included, with no fee at your expense; only credit brokerage and the ‘From deed to keys’ support remain paid options, disclosed before any commitment.
Your situation deserves better than a general rule
These markers hold for everyone; your wealth, however, is particular. A wealth study starts from your actual situation: a first structuring outline and the property types that suit it, followed by a thirty-minute scoping call.
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