SCI taxed under corporation tax (IS) in 2026: taxation, depreciation and comparison with the IR regime

Updated 25 May 2026 — by Samuel Hayot, chartered accountant (expert-comptable)

The SCI taxed under French corporation tax (IS) attracts property investors because it allows the building to be depreciated, reduces the taxable base during the holding period, and defers the partners' personal tax burden. All of this is accurate — but it is only part of the picture.

The IS option (article 206-3 of the French Tax Code, Code général des impôts — CGI) is in principle irrevocable beyond a five-year window. More importantly, it fundamentally changes the taxation of the capital gain on resale: whereas an SCI under the personal income tax (IR) regime benefits from the individual capital gain rules (full IR exemption after 22 years, full social contributions exemption after 30 years), an SCI under IS generates a professional capital gain computed against the depreciated book value, with no holding-period reduction whatsoever.

Many directors and investors discover this too late — at the point of selling.

In short: The IS regime suits long-horizon capitalisation projects (reinvestment of profits, high marginal income tax bracket for partners, patrimonial holding structure). It becomes a costly choice if resale is anticipated within 22 years, because the professional capital gain — calculated after all accumulated depreciation — is taxed at IS rates with no relief for holding period.

An SCI (société civile immobilière — French real estate civil company) is by default a fiscally transparent entity: its profits are taxed directly at the level of each partner as property income (revenus fonciers) under article 8 of the CGI. This transparency is the natural regime for civil companies.

Article 206-3 of the CGI provides an exception: the SCI may opt for corporation tax (IS). The election is filed in writing with the local business tax office (Service des Impôts des Entreprises — SIE) within three months of the company's registration or of the end of its first financial year.

Once filed, the option is irrevocable beyond five years from the first IS financial year. After that window, the SCI remains under IS permanently.

Once the option takes effect:

• The company pays IS on its net taxable profit.
• Full commercial accounting becomes mandatory (double-entry bookkeeping, balance sheet, income statement, annual notes, tax bundle form 2065).
• The building may be depreciated by components — something not available under the IR regime (the land is never depreciable).
• Partners are taxed only when they actually receive a salary, interest on shareholder current accounts, or a dividend distribution.

Three cumulative conditions for the 15% reduced rate: turnover excluding VAT below €10 million, fully paid-up share capital, at least 75% of the capital held by individuals.

Dividends paid to individual partners are subject to the flat tax (prélèvement forfaitaire unique — PFU) of 30% (12.8% income tax + 17.2% social contributions), or on a global annual option to the progressive income tax scale plus 17.2% social contributions.

Component depreciation: how it works#

The property is broken down into components, each depreciated over its own useful life:

The land is never depreciable.

Worked example: property acquired for €600,000, annual rents of €30,000#

Assumptions: rental property acquired for €600,000 (including €120,000 land, i.e. 20%). Annual gross rents: €30,000. Deductible operating charges excluding depreciation: €6,000/year. Partners' marginal income tax rate: 30%.

Annual depreciation (simplified):

• Depreciable building value: €480,000
• Average depreciation over 40 years: €480,000 / 40 = €12,000/year

IS taxable result:

• Rents: €30,000
• Operating charges: −€6,000
• Depreciation: −€12,000
• Taxable profit: €12,000
• IS at 15%: €1,800/year

Same result under the IR regime (revenus fonciers):

• Rents: €30,000
• Operating charges: −€6,000
• Taxable property income: €24,000
• Income tax 30% + social contributions 17.2% = 47.2% × €24,000 = €11,328/year

Annual tax saving IS vs IR: approximately €9,500 — funds that remain inside the SCI and can be reinvested.

Capitalisation and deferred personal taxation#

As long as profits are not distributed, they remain inside the SCI and compound. This is particularly valuable for partners already in the 41% or 45% income tax brackets: under the IR regime they would pay close to 62% on bare rental income (including social contributions), while the IS regime caps the annual charge at 15% up to €42,500.

The professional capital gain: the most common blind spot#

When an SCI under IS sells a property, the capital gain is computed against the net book value (NBV) — i.e. the acquisition cost minus all accumulated depreciation. The resulting gain is classified as a professional capital gain and taxed at IS rates (15% or 25%) with no holding-period reduction of any kind.

Comparative table: resale taxation SCI IS vs SCI IR#

Worked example — same €600,000 property, resale after 20 years for €900,000#

SCI under IS:

• Accumulated depreciation over 20 years: €12,000 × 20 = €240,000
• NBV at date of sale: €600,000 − €240,000 = €360,000
• Professional capital gain: €900,000 − €360,000 = €540,000
• IS at 25%: €135,000
• Net proceeds inside SCI: €765,000. If distributed as dividends: additional 30% PFU on the amount paid out.

SCI under IR:

• Gross capital gain: €900,000 − €600,000 = €300,000
• After 20 years: IR reduction 6%/year from year 6 to year 21 = 14 × 6% = 84% → residual IR base: €300,000 × 16% = €48,000 → IR: 19% × €48,000 = €9,120
• Social contributions: holding reduction 1.65%/year from year 6 to year 21 → residual base approximately €300,000 × 8.75% → PS: approximately €4,950
• Total capital gain tax: approximately €14,070

The gap on exit alone exceeds €120,000. This is why a 10/20/30-year simulation is non-negotiable before filing the IS option.

Favour SCI IS when:

• Partners' marginal income tax bracket is 41% or 45% — the 15% IS rate is structurally more efficient.
• The project is built around capitalisation: rents are reinvested, not withdrawn.
• The holding horizon is very long (beyond 30 years) or there is no identified resale plan.
• The SCI is held inside a patrimonial holding company using the parent-subsidiary dividend exemption regime (95% exemption under conditions).

Favour SCI IR when:

• Family transfer is the primary long-term objective (gradual gift of shares, capital gain step-up on death, favourable inheritance treatment).
• Resale is anticipated within 22 years: the holding-period reductions make the IR regime far more efficient at exit.
• Partners have a moderate marginal rate (below 30%): the IS advantage is limited.
• Significant renovation works create a property deficit that can be used to reduce partners' global income.
• The project is simple: unfurnished rental, no capitalisation objective.

When an SCI IS sells a property with a significant gain, two levels of taxation may cumulate:

1. IS on the professional capital gain (15% or 25%) at company level.
2. 30% PFU on dividends if the net proceeds are then distributed to individual partners.

This double layer is structural and applies regardless of how long the property was held. It does not apply to the SCI IR regime, where the capital gain is taxed once at partner level with holding-period reductions. In practice, reinvesting the proceeds into a new property — rather than distributing them — is often the only way to defer the second level of taxation.

Furnished rental is a commercial activity under article 206-2 of the CGI. An SCI that carries out furnished rental on a habitual basis is automatically subject to IS — even without any formal election — because the activity changes the nature of the company from civil to commercial.

For an LMNP (Loueur en Meublé Non Professionnel) project, avoid the SCI structure entirely. Prefer:

• A sole trader (entreprise individuelle) under the BIC standard regime, which allows depreciation without triggering IS.
• A SARL de famille on optional IR transparency (article 239 bis AA CGI), subject to conditions.

• The 15% reduced SME rate requires all three conditions in article 219 I-b CGI to be met — check that capital ownership has not shifted to a legal entity, which would disqualify the rate.
• Filing the tax bundle 2065 and depositing accounts with the Commercial Court registry are mandatory for every SCI IS, including small structures. Failure to file triggers penalties and court injunctions.
• The ongoing electronic invoicing rollout (2026–2027) requires accounting adaptations for SCI IS entities under the standard real regime.

1. Model both regimes over 10, 20 and 30 years: rents, operating charges, depreciation, debt service, capital gain at various resale prices.
2. Define the primary objective: capitalisation or family transfer? The two logics do not converge.
3. Assess the partners' current and projected marginal income tax rate.
4. Budget for the accounting workload: annual cost, choice of accountant, financial year-end calendar.
5. File the option formally by registered letter to the SIE within the three-month window.
6. Never file the option without a written opinion from your chartered accountant or tax adviser — the irrevocability makes this a one-way door.

For further reading on related topics:

• Should you set up an SCI to invest in property?
• Rental management and accounting: legal obligations
• How to optimise your estate

Disclaimer: This article is for information purposes only and does not constitute personalised tax or legal advice. French tax rules evolve; the thresholds, rates and conditions mentioned reflect the law as at 25 May 2026 (verify before acting). Any IS option or estate planning decision requires a review of your specific situation, documents and the applicable law at the date of the decision.

Hesitating between an SCI taxed under IS and an SCI taxed under IR? We model both scenarios with full projections of rents, debt, depreciation and exit taxation at 10, 20 and 30 years — before any decision is taken.