Loan and SCI: the tax leverage to buy your premises
Buying your premises on credit through an SCI lets you deduct interest, self-finance the asset through rents and amplify returns. A worked calculation of leverage under income tax and corporate tax.
Expert note: This article was written by our chartered accountancy firm. Information is current as of 2026. For a personalised review of your situation, contact us.
Quick answer. Buying your business premises on credit through an SCI creates leverage: the rents repay the loan, the interest is deductible, and depreciation comes on top if the SCI is at corporate tax. With a limited down payment, you build an estate financed largely by rents and the bank, while reducing tax during ownership.
Financing your premises on credit rather than from your cash is not just a cash question: it is a wealth-leverage choice. Well used, a loan lets you acquire a large asset with a reduced down payment, deduct the interest and, under corporate tax, depreciate the building. Let us see how this leverage is calculated, and what changes between an SCI at income tax and an SCI at corporate tax.
The principle of leverage#
Leverage means using the bank's money to acquire an asset that partly repays itself.
In an SCI that buys let premises, the rents collected serve to repay the loan. On premises financed to the tune of 400,000 euros over 20 years, with a down payment of only 40,000 euros, it is the tenant who finances most of the acquisition, month after month. At the end of the loan, the SCI holds a debt-free asset, built largely from rents and not from your savings.
Leverage works all the better when the credit rate stays below the net rental yield. It is the basic condition of a successful credit arrangement, to assess before signing.
Interest deduction amplifies the leverage#
Taxation reinforces the leverage by making loan interest deductible.
In an SCI at income tax, interest is deducted from property income, which reduces the tax on rents, or even creates a carry-forward deficit. In an SCI at corporate tax, interest is a financial charge deductible from the result. The precise rules of this deductibility, loan fees included, are detailed in our article on deductible real-estate loan interest.
On a loan of 400,000 euros, the first year's interest can represent several thousand euros, fully deductible. This deduction lightens the tax bill at the moment when interest is heaviest, that is the early years of the loan.
Depreciation, the extra leverage of corporate tax#
The SCI at corporate tax adds a second tier of tax leverage through depreciation.
Under corporate tax, the building is depreciated over its useful life, for example over 30 to 40 years for the structure, excluding land. On a built property valued at 350,000 euros depreciated over 35 years, the annual depreciation is around 10,000 euros, which adds to the interest to reduce taxable profit. Combined, interest and depreciation can neutralise much of the profit for 15 to 20 years, a period when the SCI pays little or no corporate tax.
The residual profit is taxed at corporate tax of 15% up to 42,500 euros, then 25% beyond (Tax Code art. 219). The trade-off is known: the deducted depreciation increases the professional capital gain on resale, which must be built into the overall arbitrage.
Comparison of leverage under income tax and corporate tax#
| Criterion | SCI at income tax | SCI at corporate tax |
|---|---|---|
| Interest deduction | On property income | On the result |
| Depreciation of the building | No | Yes, excluding land |
| Tax during ownership | Often reduced by charges | Often very low in the early years |
| Capital gain on resale | Individual regime, holding allowance | Professional, no allowance |
| Overall tax leverage | Moderate | Strong during ownership |
Our view#
A loan in an SCI is a powerful lever, provided you do not confuse the tax relief during ownership with a definitive gain. Corporate tax maximises the current leverage, interest and depreciation combined, but defers the charge to the exit gain. Income tax offers more moderate leverage, with no depreciation, but keeps the holding-period allowance.
Our method is to cost the arrangement over its whole life: tax saving during ownership on one side, exit taxation on the other. For an owner who will hold long and transmit, corporate tax is often relevant. For one who will sell in the medium term, income tax keeps the edge. Leverage is never judged on the first year alone, but on the whole cycle, in line with the structure choice developed in our comparison SCI or direct ownership.
A common case#
An owner wanted to buy his premises in cash to avoid paying interest. The simulation compared two scenarios: a cash purchase at 400,000 euros, and a credit purchase with a 40,000 euro down payment over 20 years. On credit, the rents repaid most of the loan, the interest was deductible, and the cash kept could finance the development of the business. Under corporate tax, depreciation further reduced the tax for 15 years. The credit leverage proved far more effective than the cash purchase, which tied up all the cash for no tax gain.
Frequently asked questions
What is the leverage of an SCI on credit?+
It is buying a large asset with a reduced down payment, the rents repaying the loan. You build an estate financed largely by the tenant and the bank, while keeping your cash for other uses.
Is the loan interest of an SCI deductible?+
Yes. In an SCI at income tax, it is deducted from property income. In an SCI at corporate tax, it is a financial charge deductible from the result. This deduction amplifies the leverage by reducing tax during ownership.
Does corporate tax amplify the leverage?+
Yes, during ownership, because the building's depreciation adds to the interest deduction to strongly reduce taxable profit. But depreciation increases the professional capital gain on resale, with no allowance.
Is it better to buy your premises in cash or on credit?+
On credit in most cases, as long as the rate stays below the net rental yield. Credit preserves cash, allows interest deduction and amplifies the return on the equity invested.
Does leverage always work?+
No. It assumes the net rental yield exceeds the cost of credit. If the loan rate is too high relative to the rent, leverage turns negative and weighs on the SCI's cash.
How to choose between income tax and corporate tax for a credit purchase?+
By costing the arrangement over its whole life: corporate tax maximises leverage during ownership but burdens the exit, income tax offers more moderate leverage but keeps the holding-period allowance. The choice depends on your horizon.
Key takeaways#
- Leverage allows premises to be acquired with a reduced down payment, the rents repaying the loan over 15 to 20 years.
- Loan interest is deductible, from property income at income tax, from the result at corporate tax.
- Under corporate tax, the building's depreciation adds to the interest and can neutralise tax for many years.
- The residual profit at corporate tax is taxed at 15% up to 42,500 euros, then 25% (Tax Code art. 219).
- Corporate tax amplifies current leverage but increases the exit capital gain, with no allowance.
- Leverage assumes the net rental yield exceeds the cost of credit, to be checked before signing.
Article written by the Hayot Expertise firm, registered with the Order of Chartered Accountants of Ile-de-France. Updated for 2026. This article is for information purposes and does not replace an analysis of your own situation.
Article written by Samuel HAYOT
Chartered Accountant, registered with the Institute of Chartered Accountants.
Regulated French accounting and audit firm based in Paris 8, built to support companies across France with a digital and decision-oriented approach.
Sources
Official and operational sources cited for this page.
This topic is part of our service Tax accountant in Paris | CIT, VAT & tax audits
Need a quote or personalised advice?
Our accountancy firm supports you through all your steps. Get a free quote to review your situation and receive a bespoke fee proposal, or contact us directly.