Real estate company (SCI) taxed under personal income tax (IR) or corporate income tax (IS): what each tax regime changes for the partners

By default, a French SCI (Société Civile Immobilière) is subject to income tax: the partners are taxed on their share of the profit, whether they have actually received it or not. It switches to corporate income tax (IS) if its commercial activity is not secondary, or if it elects to do so. This election can be revoked up to five fiscal years following the year in which the election was made. After this period, it becomes irrevocable.

This page does not designate a preferred regime: the choice depends on the use of income, deficits and the planned exit.

It deals with a French real estate company (SCI) whose partners are natural persons resident in France, excluding transfer of shares, non-resident partners and transmission.

The starting point: the SCI (real estate investment company) taxed under the IR (income tax) regime

A French real estate investment company (SCI) is a civil company that acquires or constructs buildings and manages them. Its main activity must be civil, i.e., unfurnished rental. It requires at least two partners.

Under the personal income tax (IR) system, profits are taxed in the name of each partner, in proportion to their share, even if they have not been distributed. Rental income is added to the partner's other income for income tax purposes. Social security contributions of 17.2% are also levied; in 2026, the CSG (General Social Contribution) on rental income remains at 9.2%.

The statements. The SCI (Société Civile Immobilière) files electronically a 2072-S tax return in the simple case, or a 2072-C return, for example, if a partner is themselves subject to corporate income tax (IS), no later than the second business day following May 1st for the previous year's rent. A partner who only holds shares in an SCI not subject to corporate income tax declares their share on line 4BA of form 2042, without completing form 2044. Form 2044 is used in other cases, for example, if they also own property directly outside the micro-property regime.

The micro-land scheme (€15,000 gross income maximum, 30% allowance %) applies automatically to the partner who also rents unfurnished accommodation directly, under certain conditions; it is excluded for those who only hold shares in real estate companies not subject to corporate income tax.

The two paths to the IS

1. Commercial activity is no longer secondary. The administration considers an excess of 10 % of turnover excluding taxes, particularly for furnished rental.
2. The option. The SCI chooses IS.

How is the option selected?

• It is notified before the end of the third month of the financial year for which the company wants the corporate income tax.
• A SCI can close a financial year in advance and opt for this within three months following this closure.

What the switch to IS can trigger

For an existing SCI (Société Civile Immobilière), two official sources describe the consequence of the option in different terms.

• Service-public.gouv.fr (sheet F38553): the switch to IS "in principle entails the immediate taxation of profits not yet taxed" and capital gains not yet taxed on the date of the change of regime.
• BOFiP (BOI-IS-CHAMP-40): The option "results in cessation of business" within the meaning of Article 202 ter of the French General Tax Code (CGI), without immediate taxation of these profits and capital gains if certain conditions are met. The SCI (real estate investment company) must file a 2072 tax return within the deadline set by this article.

This page does not definitively state or quantify this consequence: it must be verified with the file in hand, before making a decision.

The two regimes side by side

What is specific to IR

Land deficit

Excluding loan interest, the property deficit can be offset against total income up to an annual limit of €10,700. Any excess, and any deficit arising from loan interest, can only be offset against property income in the following ten years. The deficit is subject to the actual expense method of taxation.

The €10,700 limit applies to each individual partner, not to the SCI (Société Civile Immobilière - French real estate company). The property must remain rented until December 31st of the third year following the deduction, otherwise the deficit will be disallowed. The partner claiming the deficit must retain their shares for the same period, i.e., until December 31st of the third year following the deduction.

The capital gain from the sale of the building

Capital gains realized occasionally by the SCI (Société Civile Immobilière) fall under the personal income tax regime. They are taxed for each partner present on the date of the sale, in proportion to their shareholding, at a rate of 19% of income tax plus 17.2% of social security contributions. A surtax applies to capital gains exceeding €50,000.

The allowances for holding period, calculated from the date of acquisition by the SCI (real estate investment company), are 6 % per year from the sixth to the twenty-first year, and 4 % for the twenty-second year; income tax exemption applies after 22 years, and social security contributions after 30 years. These exemptions generally apply, except for pensioners.

A capital loss cannot be offset against other capital gains, nor against overall income. The notary pays the tax; each partner reports their share in box 3VZ.

What is specific to IS

• Depreciation. Only the cost of construction, excluding the land itself, can be amortized. The land itself cannot be amortized.
• The deficits. They are carried forward to the profits of the following financial years, without time limit, up to a limit of €1,000,000 per year plus 50 % of the portion of the profit exceeding this ceiling.
• Partners' current accounts. Interest is deductible up to a reference rate, revised quarterly, and if the company's capital is fully paid up.
• Dividends. For a natural person partner, they bear the single flat-rate levy of 31.4 % (12.8 % of tax and 18.6 % of social levies), or the scale by option, with a deduction of 40 %.
• The rate of 15 %. It assumes a turnover of no more than €10,000,000 and fully paid-up capital, at least 75% of which is held by natural persons.

A recent device, worth checking before investing

The 2026 Finance Law (Article 47) created the "Housing Recovery" scheme (Jeanbrun): a deduction from rental income for the depreciation of a portion of the purchase price, for investments made between February 21, 2026, and December 31, 2028, for unfurnished rentals as a primary residence for 9 years, subject to rent and income ceilings. The official documents consulted do not specify whether it applies to a French real estate investment company (SCI). The annual ceiling is not provided, as the sources consulted are inconsistent: it should be verified before investing.

Numerical example (fictitious profile)

Situation. A married couple, residents of France, own a French real estate company (SCI) that rents out an unfurnished building. For the fiscal year, the rental income is €60,000 and the deductible expenses are €20,000, resulting in a profit of €40,000. It is assumed that the partners' marginal tax rate is 30%, and that the company, subject to corporate income tax (IS), meets the conditions for the 15% tax rate.

Issue. Compare the tax for the year according to the tax regime and the use of the profit.

Strategy. Three cases: SCI under IR, SCI under IS without distribution, SCI under IS with distribution of all the result after IS.

Result.

Under the personal income tax (IR) regime, the €18,880 is borne by the partners even without distribution. Under the corporate income tax (IS) regime, €6,000 is owed by the company; the partners bear the flat tax on dividends received.

This table compares a single fiscal year. It ignores depreciation on the building, the personal circumstances of the partners, the sale of the property, and the potential consequences of an existing SCI (French real estate investment company) switching to corporate income tax, as described above. The profile is fictitious, and the 30% tax rate is an assumption.

What changes depending on your situation

• The number of partners and their marginal tax rate.
• The share of the profit you want to take from the company.
• The nature of the activity: unfurnished or furnished rental.
• A construction project and a potential land deficit.
• The detention period and the method of release.

No results are promised: the rule depends on your situation, so check before deciding.