Corporate-tax SCI: depreciating the building and weighing it against income tax in 2026

Quick answer. In a corporate-tax SCI, depreciating the building reduces the taxable profit each year, hence the corporate tax during the holding period. The downside lands at resale: the capital gain is computed on the net book value, so the depreciation taken inflates the taxable gain, with no allowance for the length of ownership. That is the whole arbitrage between a corporate-tax SCI and an income-tax SCI.

Depreciating the building is often presented as the decisive advantage of an SCI subject to corporate tax (IS). It is, but only by half. What you deduct during the holding period comes back, in mirror image, into the capital gain at resale. Understanding this two-stage mechanic is essential before choosing between a corporate-tax SCI and an income-tax SCI (IR), because the right choice depends less on annual yield than on what you intend to do with the property in the end.

This comparison details how component depreciation works, its figured effect on profit, then its downside at sale, before setting the corporate-tax SCI against the income-tax SCI on a single building.

An income-tax SCI falls under property income (revenus fonciers): it cannot depreciate the building. It deducts real costs (loan interest, property tax, maintenance work), but not the wear of the structure. A corporate-tax SCI, by contrast, keeps commercial accounts: the building is a fixed asset recorded on the balance sheet, and its depreciation is deducted each year.

This is a difference of nature, not of degree. Under corporate tax, depreciation turns a non-cash charge (the asset still exists) into a very real tax cut. On an income-producing building, this effect can neutralise almost all the taxable profit for many years. The overall logic of this regime choice is covered in our article corporate-tax SCI or income-tax SCI; here, we go into the mechanics of depreciation and capital gains.

A building is never depreciated as a single block. First, the land is not depreciable: it does not lose value through use. So you must start by splitting the purchase price between the land share (often 10% to 20% in urban areas) and the structure share, the only depreciable part.

The structure itself then breaks down into components, each depreciated over its own useful life (the so-called component method). The frame lasts the longest; technical items and fittings, far less. Here is an indicative split for a rental building:

Take a building bought for 500,000 EUR by a corporate-tax SCI, of which 100,000 EUR of land and 400,000 EUR of structure. Using median periods, the frame (200,000 EUR over 50 years) gives 4,000 EUR a year, the facades (60,000 EUR over 25 years) 2,400 EUR a year, the roof (40,000 EUR over 30 years) about 1,333 EUR a year, the technical installations (60,000 EUR over 20 years) 3,000 EUR a year and the fittings (40,000 EUR over 12 years) about 3,333 EUR a year. In total, the building generates close to 14,000 EUR of depreciation a year over the first twelve years.

Let us continue with this building. Suppose it brings in 30,000 EUR of annual rent and bears 8,000 EUR of deductible costs excluding depreciation (loan interest, property tax, insurance, management fees).

Without depreciation, the taxable profit would be 22,000 EUR, subject to corporate tax at the reduced rate of 15% up to 42,500 EUR of profit, so 3,300 EUR of tax. With the 14,000 EUR of annual depreciation, the profit drops to 8,000 EUR, and the tax to 1,200 EUR. The saving thus reaches about 2,100 EUR a year, and close to 31,500 EUR over 15 years of ownership.

This reduced 15% rate applies up to 42,500 EUR of profit for companies whose turnover stays below 10 million euros and whose fully paid-up capital is held at least 75% by individuals. Above 42,500 EUR, the profit is taxed at 25%. The cash thus preserved each year can fund loan repayment or a new investment, which is the central argument for corporate tax for a portfolio under construction.

This is where the mechanic reverses. Under corporate tax, the capital gain on a building sale is computed not on the purchase price, but on the net book value: the cost price reduced by the depreciation already taken. The more you have depreciated, the lower the net book value, and the higher the taxable gain. The depreciation deducted during the holding period is therefore, in practice, recaptured at resale.

Let us carry on with the example. After 15 years, the building is resold for 650,000 EUR. The accumulated depreciation amounts to about 200,000 EUR (frame 60,000 EUR, facades 36,000 EUR, roof 20,000 EUR, installations 45,000 EUR, fittings 40,000 EUR fully depreciated over 12 years). The net book value comes to 500,000 EUR less 200,000 EUR, that is 300,000 EUR. The professional capital gain is therefore 650,000 EUR less 300,000 EUR, that is 350,000 EUR.

This gain is taxed at the standard corporate-tax rate: there is no long-term regime for operating buildings, and above all no allowance for the length of ownership. On 350,000 EUR, the tax is around 83,000 EUR (15% up to 42,500 EUR, 25% beyond). And that is not all: to take the net proceeds out of the SCI into the members' private wealth, the dividend distribution bears the single flat-rate levy of 31.4% (12.8% income tax and 18.6% social contributions since the 2026 social security financing act). The double taxation, under corporate tax then at distribution, is the price of the advantage gained during the holding period.

Let us put the same building in an income-tax SCI. For want of depreciation, the purchase price stays at 500,000 EUR. At a resale of 650,000 EUR after 15 years, the private capital gain is 150,000 EUR (setting aside the standard works and acquisition-cost deductions that would reduce it further).

Above all, this gain benefits from the allowance for the length of ownership. After 15 years, the income-tax allowance reaches 60% (6% a year from the 6th to the 21st year), bringing the taxable base to 60,000 EUR, taxed at 19%, that is about 11,400 EUR. The social contributions, at 17.2%, benefit from a 1.65% yearly allowance: the base stays at 83.5%, that is 125,250 EUR, for a levy of about 21,500 EUR. The total nears 33,000 EUR, against close to 83,000 EUR under corporate tax, before the taxation of the distribution. And the income-tax advantage widens over time: the income-tax exemption is total after 22 years of ownership, the social-contribution one after 30 years.

The arbitrage boils down to this: the corporate-tax SCI wins on the holding period (less tax thanks to depreciation, cash rebuilt), the income-tax SCI wins on the exit (lighter gain, then exempt over time). The choice therefore depends on the horizon. An investor who intends to keep and pass on the building, without reselling, capitalises the corporate-tax advantage without ever suffering its downside. An investor aiming at a medium-term resale will most often lose out.

Depreciation is not a definitive tax gift: it is a deferral of tax. What corporate tax saves you over 15 years, it partly reclaims at resale, through a reduced net book value and an inflated gain. Presenting depreciation as a net gain, without mentioning the sale, leads to flawed decisions.

Our advice is to reason on the likely holding period and the final destination of the asset. For a building meant to be kept for a long time, rented and passed on, corporate tax and its depreciation are often relevant. For an asset you plan to resell within ten to fifteen years, the income-tax SCI, with its growing allowance, better protects the gain. This reasoning is best conducted upstream, ideally during a real-estate tax consultation, because the regime choice is in practice hard to undo.

A client had held a rental building for 16 years in a corporate-tax SCI, bought for 600,000 EUR and depreciated by about 230,000 EUR over the years. He wished to resell it for 900,000 EUR to fund another project. The calculation surprised him: the net book value was only 370,000 EUR, so the professional gain came to 530,000 EUR, taxed at the standard corporate-tax rate, then the balance still had to bear the flat levy at distribution. By contrast, an identical holding in an income-tax SCI would, after 16 years, have brought the taxable base below 40% for income tax. The lesson is clear: the depreciation advantage and the cost of the capital gain are two sides of the same coin, and it is the holding horizon that decides which prevails.