Mixed SCI for housing and business premises: tax precautions
Holding residential and business premises in one SCI: VAT allocation, choice of tax regime, and the furnished-rental trap that can switch the whole SCI to corporate tax. The precautions to take.
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. A mixed SCI holds both housing and business premises. Unfurnished residential rental is VAT-exempt, business-premises rental is too unless an option is made (Tax Code art. 260), which forces an allocation. Above all, introducing furnished rental into an SCI at income tax can switch it to corporate tax by operation of law (Tax Code art. 206), unless it stays under the 10% tolerance of commercial receipts.
Holding a residential flat and a commercial unit in one SCI looks practical, but this mix creates tax frictions that many partners discover too late. Between VAT to allocate and the corporate-tax switch linked to furnished rental, the mixed SCI requires precise precautions. Let us review it through concrete questions.
The VAT of a mixed SCI: allocate by use#
VAT depends on the nature of each rental, and this is the first point to clarify.
Unfurnished residential rental is VAT-exempt (Tax Code art. 261 D). Unfurnished rental of business premises is also exempt in principle, but the SCI can opt for VAT to recover the tax on its expenses (Tax Code art. 260). In a mixed SCI, these two regimes coexist, which forces an allocation of receipts and expenses between the residential part, outside the scope of the option, and the business part, within the scope of any option.
This allocation determines the right to deduct VAT on works and charges. A clear assignment of expenses to each use is essential, a subject we develop in our article on the VAT option of an SCI and the mistakes to avoid.
The furnished-rental trap#
The most underestimated risk of a mixed SCI lies in the nature of the rental, not the use of the premises.
An SCI that lets furnished premises is regarded as carrying on a commercial activity and becomes subject to corporate tax by operation of law (Tax Code art. 206). The danger is that a single share of furnished rental can switch the whole SCI to corporate tax, with its consequences on depreciation, the taxation of the result and the exit gain.
The tax authority does, however, allow a tolerance: the SCI can stay at income tax as long as its commercial receipts, including furnished rental, do not exceed 10% of its total receipts excluding tax. Beyond that, the switch to corporate tax applies. This tolerance is a threshold to watch closely, not an acquired right.
| Configuration of the mixed SCI | Tax regime |
|---|---|
| Unfurnished residential and business rental | Income tax (property income), corporate-tax option possible |
| Furnished share under 10% of total receipts | Income tax maintained, tolerated |
| Furnished share above 10% | Corporate tax by law for the whole SCI |
The choice of tax regime#
The income-tax or corporate-tax regime must be arbitrated taking into account the mixed nature of the holding.
Under income tax, each partner is taxed on their share of property income, with no depreciation, with the individual capital gain on exit. Under corporate tax, the SCI depreciates the buildings and reduces current tax, but increases the gain on resale. In a mixed SCI, this choice interacts with the VAT question and with the switch risk linked to furnished rental, which makes the arbitrage trickier than for a single-use SCI. We always link it to the overall comparison SCI at corporate tax or income tax.
Allocating charges between the two uses#
A mixed SCI must split its charges between the residential part and the business part.
Directly assignable charges, such as works specific to one unit, follow the relevant use. Common charges, such as the property tax of the whole building or insurance, are allocated under an objective key, for example floor areas. This allocation is necessary both for computing the result of each income category and for the right to deduct VAT on the business part. Simple analytical accounting, by use, avoids most disputes.
Our view#
The mixed SCI is viable, but it demands a discipline that the single-use SCI does not require. Mixing housing and business multiplies the applicable regimes, and the slightest furnished rental can switch the whole to corporate tax.
Our advice is to identify from the start the exact nature of each rental and to set a clear rule on furnished rental: either exclude it, strictly contain it under the tolerance threshold, or accept corporate tax knowingly. The allocation of VAT and charges must be organised before the first return, not reconstructed afterwards. A poorly framed mixed SCI accumulates the drawbacks of both worlds instead of drawing their benefits.
A common case#
An SCI held a building with two flats let unfurnished and a commercial unit. The partners wanted to furnish one of the flats to raise the rent, without gauging the consequence. The planned furnished share exceeded 10% of total receipts, which would have switched the whole SCI to corporate tax, triggering mandatory depreciation and an eventual professional gain. The analysis led them to give up furnished rental in the SCI and to study a separate structure for the furnished activity, preserving the income-tax regime of the original mixed SCI.
Frequently asked questions
Can an SCI hold housing and business premises?+
Yes, an SCI can hold a mixed estate. But each type of rental follows its own VAT and tax rules, which forces an allocation of receipts and charges between the residential part and the business part.
How does VAT work in a mixed SCI?+
Unfurnished residential rental is VAT-exempt (Tax Code art. 261 D). Unfurnished rental of business premises is exempt unless an option for VAT is made (Tax Code art. 260). The mixed SCI must allocate its receipts and expenses to determine its deduction right on the business part.
Does furnished rental switch the SCI to corporate tax?+
Yes, in principle. An SCI that lets furnished property carries on a commercial activity and becomes subject to corporate tax by operation of law (Tax Code art. 206). It stays at income tax only if its commercial receipts, furnished rental included, do not exceed 10% of its total receipts excluding tax.
What is the 10% tolerance?+
It is an administrative tolerance that lets an SCI carry on an accessory commercial activity, such as furnished rental, without switching to corporate tax, as long as those receipts stay under 10% of total receipts excluding tax. Beyond that, corporate tax applies to the whole SCI.
How do you allocate the charges of a mixed SCI?+
Charges specific to a unit follow its use. Common charges, such as the property tax or insurance of the whole building, are split under an objective key, often floor areas. This allocation serves the result computation and the VAT deduction right.
Should you choose income tax or corporate tax for a mixed SCI?+
It depends on your objectives and any furnished rental. Income tax keeps the individual capital gain, corporate tax allows depreciation but increases the exit gain. In a mixed SCI, the choice interacts with VAT and the switch risk linked to furnished rental, which justifies a dedicated analysis.
Key takeaways#
- A mixed SCI holds housing and business premises, with distinct VAT and tax regimes to allocate.
- Unfurnished residential rental is VAT-exempt, business-premises rental too unless an option is made (Tax Code art. 260 and 261 D).
- Furnished rental makes the SCI subject to corporate tax by law (Tax Code art. 206), except under the 10% tolerance of total receipts.
- The income-tax or corporate-tax choice interacts with VAT and the switch risk, trickier than for a single-use SCI.
- Common charges are allocated under an objective key, often floor areas.
- It is better to frame the nature of each rental and the place of furnished rental from the SCI's creation.
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
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