Real-estate OBO: refinancing your premises without losing them

Quick answer. A real-estate OBO (owner buy out) means selling your premises to an SCI or holding you control, financed by a bank loan. The owner receives the price, that is cash, while keeping control of the asset through the company. The sale must be at market value and the structure must genuinely operate, otherwise the tax authority can set the arrangement aside as abuse of law (TPC art. L64 and L64 A).

The real-estate OBO answers a frequent owner question: how do you turn a real-estate asset into cash without selling to a third party or losing control? The technique, derived from the LBO, means selling your own premises to a company financed by credit. Here is the step-by-step guide, the costing of the real burden and the essential tax precautions. The anti-abuse framework is set by articles L64 and L64 A of the Tax Procedure Code: it dictates the rigour the operation demands.

The real-estate OBO is a sale to yourself organised to free up cash, without losing control.

The owner sells their asset, for example the premises of their business held directly or through an income-tax SCI, to an SCI they create and control, often with family. The SCI finances the purchase with a bank loan. The owner receives the sale price, that is immediate cash, while keeping control of the asset through the shares they hold.

It is leverage applied to your own estate: the bank finances the buyback, the rents of the business repay the debt, and the owner has turned a fixed asset into cash without really parting with it. The choice of host structure is never neutral: it drives the taxation of the rents and of the future resale, as we detail in our comparison SCI or direct ownership of business premises.

A real-estate OBO unfolds in a precise sequence that must be respected in order.

1. Have the premises valued at market value by an independent expert.
2. Create the SCI or holding that will buy the asset, with a coherent capital and purpose.
3. Obtain the bank financing of the acquisition, based on a sustainable rent.
4. Complete the sale before the notary, with payment of transfer duties.
5. Cost and handle the seller's possible capital gain.
6. Run the company over time, with a written lease and rents actually paid.

Each of these steps carries its own stake, and the soundness of the whole depends on respecting all of them. A botched step (undervalued price, sham financing, shell company) weakens the entire operation.

The OBO has a tax cost that must be costed before starting: it is measured on both the seller's and the buyer's side.

On the seller's side, the sale may generate a taxable gain. If it is a private asset or an income-tax SCI, it is the individual real-estate capital gain, with its holding-period allowance: full income-tax exemption after 22 years of ownership and social-levy exemption after 30 years. On the buyer's side, the basis of the duties depends on what is sold.

• Sale of the building (the most common case in an OBO): the SCI bears the transfer duties for valuable consideration. On an existing building, the standard overall rate is 5.81% of the price (departmental duty 4.50%, communal tax 1.20%, assessment fee 2.37% of the departmental duty, real-estate security contribution 0.10%). Since the 2025 Finance Law, departments may raise the departmental duty to 5% for deeds signed between 1 April 2025 and 31 March 2028: in departments that voted the increase, the overall rate reaches about 6.3%. The notary's deed fees are added on top. The exact rate depends on the department of the asset, to be checked case by case.
• Sale of the shares of a company with a preponderance of real estate: the registration duties are 5% (Tax Code art. 726). This route can lower the acquisition cost, but it assumes the asset is already held in a company and does not erase the seller's capital gain.

The choice between an income-tax SCI and a corporate-tax holding (or SCI) changes the whole economics of the operation. Here are the two logics side by side.

The cash freed up is therefore not free: the liquidity gain is measured net of the gain and duties, and the tax regime of the host structure weighs over ten to twenty years. This is the whole point of the prior calculation, which we carry out as part of owner wealth management.

Nothing beats a concrete case to measure what really stays in the owner's pocket.

Take commercial premises valued at 500,000 EUR, held directly for many years. The family SCI buys them back, financed 100% by the bank, and signs the deed before the notary.

If the asset has been held for more than 30 years, the capital gain is fully exempt from income tax and social levies: the owner receives 500,000 EUR in cash, and it is the SCI that bears the acquisition duties and fees (approx. 33,000 to 37,500 EUR), carried by the loan. If the holding period is shorter, the capital gain must be costed before signing: it can absorb a significant share of the hoped-for cash. These figures are indicative and must be recalculated on your real file.

The OBO is only one option among others to free up cash: it still has to be the right tool at the right time.

Our view: the OBO stands out because it captures 100% of the asset's value in one go while keeping control, where dividends only release annual flows and a sale to a third party loses the asset. It does, however, carry an entry cost the other techniques do not. The arbitrage depends on the liquidity need, the horizon and the estate objective.

The OBO is a technique known to the tax authority, which closely monitors its abuses.

The arrangement must answer a real objective (free up cash, prepare a transmission, reorganise an estate). The tax authority can set it aside as abuse of law if it is fictitious or could have had no motive other than to evade tax (Tax Procedure Code art. L64), and even if it pursues a mainly fiscal aim under the mini-abuse-of-law rule (Tax Procedure Code art. L64 A).

The three anti-abuse pillars to secure:

1. An independent valuation setting the market value, written and documented.
2. Real, non-fictitious bank financing, backed by a sustainable rent.
3. A company that genuinely operates: written lease, rents actually collected, accounting kept.

A botched OBO, at an undervalued price or without substance, exposes to a reassessment with penalties. When the OBO fits into a wider reorganisation, the logic meets that of a holding set up after the buyback of a company.

Our view: an excellent liquidity tool, but zero approximation#

In our files, the real-estate OBO is an excellent lever for an owner who wants to free up cash, for example to prepare for retirement, buy out a partner or finance a project, without permanently giving up their estate. It is also the arrangement that least forgives approximation. Our method is to first cost the real tax burden, gain and duties included, then to arbitrate the structure (income tax or corporate tax) according to the horizon: an owner who will resell in five years does not have the same interest as one who wants to transmit to their children. We then secure each anti-abuse pillar. Well built, the OBO combines immediate liquidity, retention of control and preparation of transmission, since the SCI shares can then be gifted or split, as we explain for the transmission of business premises in an SCI.

The right timing matters as much as the right arrangement: a successful OBO is prepared upstream.

Three situations make the operation particularly relevant. First, when the asset has appreciated: the higher the market value relative to the acquisition price, the more cash the OBO mobilises, and the longer the holding period, the more the seller's capital gain is softened. Next, when a capital need is specific and acute: preparing for retirement, buying out a partner's shares, financing a personal or professional project. Finally, when a transmission is on the horizon: carrying out the OBO several years before a sale or a gift leaves time to transmit the SCI shares gradually.

Conversely, it is better to refrain if the only motivation is fiscal (reducing the real-estate wealth tax, for instance), if the tenant business cannot absorb the rent, or if the holding period is too short for the capital gain to remain bearable. As a rule, anticipating a planned resale by five years or more gives the operation the distance it needs to demonstrate its substance.

An owner near retirement held his commercial premises directly, debt-free, but lacked cash for his personal projects. An independent valuation set the market value of the premises, indisputable and documented. He set up a family SCI with his two children, which borrowed to buy the asset. The owner received the price while keeping control through the majority of the shares.

The bank financing was real, backed by a rent the business could sustain. The SCI operates with a written lease and rents actually paid. The seller's gain, softened by a long holding period, was costed upstream to avoid any surprise. The income-tax versus corporate-tax arbitrage was settled in favour of income tax, to preserve the favourable individual capital-gain regime on resale. The operation freed up the desired cash while starting the gradual transmission of the shares to the children, through successive gifts.

In practice: securing a real-estate OBO#

Here are the operational reflexes to build a sound OBO, in order:

• Have a written, dated valuation drawn up: it is the key anti-abuse-of-law piece.
• Settle the income-tax versus corporate-tax arbitrage according to the horizon (resale, retention, transmission) before setting up the structure.
• Check the repayment capacity: the rent must cover the loan instalment without choking the business.
• Draw up a genuine commercial or professional lease, with a market-level rent, and actually collect it.
• Keep rigorous SCI accounting and declare the rents every year.
• Anticipate the exit: split ownership or gift of the shares to articulate liquidity and transmission.

A few pitfalls keep coming up in OBOs done too quickly.

• An undervalued price is the tax authority's first warning signal: without a valuation, the price retained is fragile.
• Sham financing (a loan with no real flow, a disguised family loan) destroys the real nature of the operation.
• An SCI without substance, with no lease or collected rents, can be reclassified: the empty shell does not hold.
• Under corporate tax, the depreciation taken during ownership sharply raises the gain on resale: today's saving prepares tomorrow's tax.
• The repayment capacity must be realistic: a rent set too high to relieve the seller may weaken the tenant business.
• The real-estate wealth tax is assessed on net real-estate assets: an OBO financed by a loan reduces the taxable base, but that must not be its main aim, on pain of abuse of law.