Buying property through an SCI or in your own name in 2026: Which option really costs less?
- 35 minutes ago
- 8 min read
You are based in France and planning to buy an apartment and rent it out. Inevitably, one key question comes up as a French entrepreneur: “Should I buy the property in my own name or set up an SCI?”
In 2026, the answer is more complex than it may seem. The first thing to consider is what you ultimately plan to do with the property and the income it generates: collect the rental income, reinvest it, sell the property, or pass it on to your children?
In reality, there are three main options to compare: personal ownership, an SCI subject to French personal income tax (IR), and an SCI subject to French corporate income tax (IS).
Personal ownership, SCI taxed under IR or SCI taxed under IS: three different approaches
For an unfurnished rental property, personal ownership and an SCI taxed under IR are fairly similar from a tax perspective. In France, net rental income is taxed at the owner’s or shareholders’ personal income tax rate, plus 17.2% in French social levies.
An SCI taxed under IS works differently. The profit is first taxed at the company level. More importantly, the SCI can depreciate the property for accounting and tax purposes, which can significantly reduce its taxable profit, particularly during the first few years.
Personal ownership | SCI under IR | SCI under IS | |
Unfurnished rental income | Income tax + social levies | Income tax + social levies paid by the shareholders | Corporate income tax |
Property depreciation | Generally no* | Generally no* | Yes |
Sale of the property | Private individual capital gains regime | Private individual capital gains regime | Corporate tax rules |
Estate planning / transfer | Standard | Easier through the transfer of shares | Easier through the transfer of shares |
* With one important change in 2026: the new Relance logement incentive.
Want to collect the rental income? Watch your French marginal tax rate
For French taxpayers who are already in a relatively high income tax bracket, the tax burden on an unfurnished rental property can quickly become significant.
EXAMPLE
Consider a French owner whose other income already places them in France in the 30% marginal income tax bracket, and who generates €12,000 in net taxable rental income per year in France. That could correspond, for example, to monthly rent of €1,400, or €16,800 per year, less €4,800 in deductible expenses.
Assuming this additional rental income remains entirely within the 30% tax bracket, it could generate approximately €3,600 in personal income tax, plus €2,064 in French social levies.
In simplified terms:
personal income tax: €3,600 based on a 30% marginal tax rate
social levies at 17.2%: €2,064
total French tax burden: approximately €5,664 on €12,000, or 47.2% of net taxable rental income
Using a French SCI taxed under IR does not fundamentally change this calculation: each shareholder remains personally taxed on their share of the SCI’s taxable profit.
An SCI can, however, offer other advantages, such as buying a property jointly, organizing decision-making between shareholders, or making it easier to plan the future transfer of the property.
Want to reinvest the rental income? An SCI taxed under IS becomes more attractive
With a French SCI taxed under IS, depreciation of the property can significantly reduce taxable profit. The standard French corporate income tax rate is 25%, with a reduced rate of 15% on the first €42,500 of taxable profit for companies that meet the eligibility requirements.
This can make the structure particularly relevant when the objective is to keep the income inside the SCI, repay a loan, and eventually finance additional investments.
But the SCI’s money is not the shareholder’s money
When the SCI retains its profit to repay debt or finance another investment, there is no additional personal tax for the shareholder at that stage.
However, if the SCI distributes that profit to the shareholder as dividends, the dividend is taxed again.
Since January 1, 2026, France’s prélèvement forfaitaire unique (PFU), commonly referred to as the “flat tax,” is 31.4%: 12.8% personal income tax plus 18.6% social levies.
In other words, the profit may first be subject to corporate income tax within the SCI and then taxed again when it is distributed to the shareholder.
This is why a French SCI taxed under IS is generally more attractive when the income remains in the company and is reinvested rather than regularly withdrawn.
Conversely, its tax advantage decreases when profits are frequently distributed to the shareholders.
The real catch often comes when you sell
Depreciation is one of the main attractions of an SCI taxed under IS while you own the property.
But it can also significantly increase the tax burden when the property is eventually sold.
Let’s take a deliberately simplified example.
A business owner buys an apartment for €300,000. The property generates €18,000 in annual rent and €6,000 in expenses and interest. The owner keeps it for 15 years and then sells it for €420,000.
With personal ownership or an SCI taxed under IR, the capital gain falls under the French private individual capital gains regime, which notably provides allowances based on the length of ownership.
With an SCI taxed under IS, the depreciation recorded each year over those 15 years has gradually reduced the property’s net book value.
When the property is sold, the taxable gain is therefore calculated using this lower book value.
For example:
original purchase price: €300,000
cumulative depreciation after 15 years: €90,000
net book value: €210,000
sale price: €420,000
The accounting gain is therefore not €420,000 - €300,000 = €120,000, but €420,000 - €210,000 = €210,000
As a result, a property purchased for €300,000 and sold for €420,000 may generate a taxable gain that is significantly higher than the €120,000 actual increase in the property’s market value.
This is why a French SCI taxed under IS that looks highly attractive year after year may become much less appealing when the property is sold.
The right calculation therefore needs to consider taxation both, while you own the property AND when you exit the investment.
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Estate planning: an SCI can offer significant advantages
A French SCI can make it easier to transfer real estate assets to the next generation, but its usefulness depends heavily on the type of property involved.
For a rental investment or a second home that is intended to remain in the family, an SCI offers real flexibility. Parents can gradually transfer shares in the SCI to their children rather than transferring a percentage of the property itself. The company’s articles of association can also establish how the property is managed and help avoid some of the difficulties associated with direct joint ownership between several heirs.
Each parent can also transfer up to €100,000 to each child free of French gift tax, with this allowance renewing every 15 years. Gradually transferring SCI shares can therefore make it possible to use this allowance over time.
For a primary residence, however, an SCI is generally less attractive. If one spouse dies, the surviving spouse may benefit from less favorable protection when the home is owned through an SCI. In addition, for households subject to France’s real estate wealth tax (IFI – Impôt sur la Fortune Immobilière), SCI shares representing the primary residence do not benefit from the 30% allowance available when the home is owned directly.
An SCI is therefore particularly relevant when the objective is to preserve and transfer rental or family real estate assets over several generations.
For a primary residence, a direct transfer, potentially using a split between usufruct and bare ownership, should generally be considered first.
For a business owner building a French property portfolio intended to be preserved and eventually transferred to the next generation, these considerations may ultimately matter more than a few percentage points of annual tax savings.
What if you already bought the property in your own name?
You can absolutely set up an SCI after purchasing the property and contribute a property you already own personally to the company.
However, the transaction is not tax-neutral. Contributing the property to the SCI may result in notarial and registration costs, duties and, depending on the circumstances, capital gains taxation.
If your only objective is to prepare for a future transfer to your children, you should therefore compare this option with a direct lifetime gift of the property, potentially involving only the bare ownership. In some situations, a direct transfer may be simpler and less expensive.
In other words, owning the property personally does not prevent you from setting up an SCI later, but you should not transfer an existing property into an SCI without first running the numbers.
The SCI should therefore be compared with the available direct transfer options before moving a property you already own into the company.
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Furnished rentals: be careful with an SCI taxed under IR
If you rent out a furnished property, personal ownership can allow you to use France’s LMNP regime (Loueur en Meublé Non Professionnel, or non-professional furnished rental landlord) when the applicable conditions are met.
An SCI taxed under IR requires more caution. Furnished rentals are considered a commercial activity under French tax rules and can cause the SCI to become subject to corporate income tax.
The French tax authorities nevertheless tolerate a limited amount of ancillary commercial activity when the related income does not exceed 10% of the SCI’s total revenue.
The LMNP regime has also lost some of its appeal when a property is sold. Since 2025, depreciation deducted under the actual-expense regime is, subject to certain exceptions, taken into account when calculating the taxable capital gain.
2026 also changes the equation with the “Jeanbrun” incentive
The 2026 French Finance Act introduced the Relance logement incentive, also known as the “Jeanbrun” scheme.
Subject to certain conditions, it allows investors to claim tax depreciation on part of the purchase price of an unfurnished rental property: a benefit that had previously been mainly associated with furnished rentals or structures subject to corporate income tax.
The scheme applies to certain newly built apartments and certain older properties requiring substantial renovation work, purchased between February 2026 and December 31, 2028.
Among other conditions, the property must generally be rented as the tenant’s primary residence for at least nine years, subject to rent caps and tenant income limits.
One particularly important point is that a property owned personally or through a company that is not subject to corporate income tax (including an SCI taxed under IR) may qualify for the scheme.
In other words, in 2026, the ability to depreciate the property is no longer, by itself, enough to automatically justify choosing an SCI taxed under IS.
One important caveat: depreciation claimed under the scheme is taken into account when calculating the capital gain if the property is later sold.
So, SCI or personal ownership in 2026?
There is no single structure that wins in every situation.
As we have seen, the right choice depends on your objectives and your personal circumstances.
Do you want to collect the rental income regularly?
→ Personal ownership or an SCI taxed under IR may offer greater simplicity.
Do you want to retain the income and gradually build a larger property portfolio?
→ An SCI taxed under IS is worth modeling.
Are you planning to sell the property in the medium term?
→ Exit taxation should be calculated before choosing corporate income tax.
Do you ultimately want to transfer the property to your children?
→ An SCI can provide significant additional flexibility.
Does your investment qualify for the Relance logement incentive?
→ The entire comparison should be recalculated in light of the new 2026 rules.
At Blendy, we can model the different scenarios before you purchase a property: taxation of rental income, financing, resale, cash distributions and estate planning.
Running a few simulations upfront can help you avoid discovering several years later that the structure that looked tax-efficient when you bought the property turns out to be far less attractive when you sell it.
Sources :
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