SCI under corporate or income tax: the owner's choice for business premises

Quick answer. To hold your business premises through an SCI that leases them to your operating company, income tax (CGI art. 8) favours long-term holding then resale (holding-period allowances, exemption over time). Corporate tax (option under art. 206-3 and 239) depreciates the building and cuts the annual bill, but raises the capital gain on sale. The trade-off depends on your time horizon.

Many business owners place their working tool (offices, workshop, retail unit) in an SCI that leases it to their operating company. The structure is classic and sound: it separates the real estate from the trading risk, builds a retirement income from the rent and prepares the transfer. One question still decides the real return over fifteen or twenty years: should the SCI stay under income tax or elect corporate tax?

This choice is not just a box on a return. It shapes your tax each year, but above all it sets, in advance, the bill for the day you sell. For the fundamentals of the look-through regime and the election, read our dedicated article on the SCI under corporate tax: definition, taxation and choice versus the income-tax SCI. Here we address the specific case of the owner who holds the walls of their business and arbitrates between annual return and resale proceeds.

The owner who holds their premises through an SCI is not a passive investor. They control the rent (since the tenant is their own company), they know the holding horizon (often tied to their career or the transfer) and they pursue two goals at once: collecting supplementary income during the trading years and recovering capital when the shares are sold or transferred.

This dual target is exactly what the income-tax versus corporate-tax choice settles. The income-tax SCI collects rent that is lightly taxed while the loan is still running, but with no depreciation, and prepares a resale that gets lighter over time. The corporate-tax SCI crushes the annual tax through depreciation of the building, but rebuilds that advantage as a capital gain on the day of sale. Before any arbitrage, the prerequisite remains choosing the right vehicle: we analyse it in our comparison of holding business premises through an SCI, directly or via the operating company.

Under income tax, the SCI is look-through (CGI art. 8): each partner is taxed on their share of property income, at their marginal income-tax rate plus social levies. The SCI cannot depreciate the building. Deductible expenses are those of property income: loan interest, maintenance works, property tax, management fees.

Any property deficit is offset against overall income up to 10,700 € per year, excluding loan interest which can only be offset against property income, with the excess carried forward. For a heavily taxed owner, this deficit can reduce personal income tax in the first years of works.

Income tax shows its main strength on sale. The disposal of the building falls under the individuals' capital gains regime (CGI art. 150 U): 19% income tax and 17.2% social levies, i.e. 36.2% before holding-period allowances. These allowances lead to an income-tax exemption after 22 years of holding and a social-levy exemption after 30 years. A surtax of 2% to 6% applies if the taxable gain exceeds 50,000 € (income tax only).

2026 point of attention. On individuals' real estate capital gains, social levies remain at 17.2% in 2026. The CSG increase that lifts the flat tax to 31.4% targets investment income and dividends, not these property capital gains. Do not transpose a dividend rate to a building sale.

By election (CGI art. 206-3 and 239), the SCI moves to corporate tax. It can then depreciate the building, land excluded, which reduces its taxable result each year. The result is taxed at 25% at the standard rate, or at 15% on the portion of profit up to or equal to 42,500 € for eligible companies. If the SCI distributes its result, partners receive dividends subject to the 31.4% flat tax.

Depreciation is the strong argument: it turns rent heavily taxed at income tax into a result largely depreciated under corporate tax, hence lightly taxed during the trading phase. For an owner who wants to maximise the SCI's annual cash or repay the loan quickly, the effect is concrete.

The downside is paid on sale. The corporate-tax SCI computes a professional capital gain: sale price less net book value, that is the acquisition price reduced by the depreciation already booked. This gain is taxed at corporate tax (25%), with no holding-period allowance whatsoever. In other words, every euro of depreciation deducted during the holding has reduced the net book value and increases the taxable gain on exit by the same amount. The annual advantage is, in part, a tax deferral towards the resale.

The table below summarises what truly separates the two regimes for the owner of their own walls.

The reading is clear: income tax and corporate tax do not compete on profitability "in general", but on the moment you recover the money. The longer you keep the building before selling, the more income tax wins. The more you favour the SCI's annual cash, the more corporate tax appeals.

1. Set your horizon. Do you plan to resell the building, keep it until retirement, or transfer the shares? The horizon is the first variable, before any rate calculation.
2. Estimate the market rent. The rent paid by the operating company must be at market price. An overstated or understated rent exposes you to the abnormal management act doctrine: see our analysis on setting the rent between the SCI and the operating company.
3. Quantify the annual tax in both regimes. Under income tax, rent net of expenses at your marginal rate plus social levies; under corporate tax, result after depreciation at 15% or 25%, then the cost of any distribution.
4. Quantify the exit. Simulate the capital gain at the planned resale date: individuals' gain with allowances under income tax, professional gain with no allowance under corporate tax. This is the step owners most often forget.
5. Compare the discounted total. Add the annual tax and the exit tax over the whole horizon, and only then decide. Our bookkeeping and review team builds this simulation from your real figures.

• Leans towards income tax: long holding horizon, intention to resell the building, wish to benefit from holding-period allowances, controlled marginal income-tax rate, loan still running and generating deductible interest.
• Leans towards income tax: plan to transfer the shares to children while keeping a net book value not eroded by depreciation.
• Leans towards corporate tax: priority on annual cash, high rent that would be heavily taxed under income tax, large loan to repay quickly, owner at a very high marginal rate bearing full income tax on the rent.
• Leans towards corporate tax: no intention to resell the building within a foreseeable horizon (the depreciation advantage only reverses on the day of sale).

Family SCI with children as partners. If transferring the shares is the goal, corporate tax and its depreciation reduce the net book value and increase a future disposal, which can work against the strategy. Splitting the shares between bare ownership and usufruct is often a better lever: see our article on splitting SCI shares to transfer to your children.

SCI backed by a holding company. When the SCI sits within a group structure, the income/corporate tax choice cannot be treated in isolation. The cost of upstreaming the rent, the taxation of dividends and the wealth organisation must be examined together: see our holding versus SCI comparison and our holding taxation service in Paris.

Asset already largely depreciated in the books. If you consider corporate tax on an older building, residual depreciation is small, so the annual advantage is limited, while the exit gain stays heavy. The trade-off loses its appeal.

Long-standing election. The corporate-tax election is global and covers the whole assets of the SCI, on the opening balance sheet. Renunciation remains possible up to the 5th financial year following the election; beyond that, it becomes definitively irrevocable. Check where you stand before any sale project.

Our reading. The most frequent mistake we see is to choose corporate tax solely for the visible tax saving each year, without quantifying the exit. Depreciation does not erase tax: it shifts it to the disposal. The right reflex is to reason on the total cost, annual tax plus resale tax, over the whole holding horizon.

The underestimated risk. In a recent file, an owner had elected corporate tax to ease the tax on the rent of their SCI during the repayment phase. Twelve years later, they sold the walls to fund their retirement and discovered a professional capital gain far higher than expected: the depreciation booked had pulled the net book value well below the sale price, and no holding-period allowance applied. Under income tax, those same years of holding would have opened the door to the income-tax exemption. The annual advantage had turned into a bill on exit.

Trade-off. If you know the building will be resold, income tax is almost always more coherent over time. If you know you will never sell (transfer on death, durable wealth preservation), the corporate-tax depreciation becomes a net advantage, since the latent gain never materialises. In between, the estimated horizon decides, not the headline rate. Our firm, registered with the Order of Chartered Accountants of Île-de-France, builds this quantified arbitrage case by case.

Hayot Expertise tip. Before electing, set down in writing your holding horizon and your resale intention, then have both scenarios quantified over the whole period, annual tax and exit tax included. Since the corporate-tax election becomes irrevocable beyond the 5th year, it is better to decide once, on figures, than to regret it when the time to sell comes.