Real Estate Chartered Accountant - SCI & LMNP

A real estate chartered accountant works with rental investors, property dealers and real estate portfolio holders in France. For a foreign investor buying a first Parisian apartment, an expat building a buy-to-let portfolio or an international business owner structuring French property through a holding company, the tax and accounting setup has a direct effect on after-tax returns.

In 2026, tax complexity increases with new rules on capital gains, LMNP depreciation reintegration, and tighter SCI structuring requirements. Hayot Expertise, based in Paris 8th (58 rue de Monceau), supports real estate investors: SCI, LMNP, property dealers and foreign buyers.

French property taxation is fundamentally different from UK, US or other systems. Key specificities that surprise foreign investors:

• No choice of entity at purchase: you need to decide before signing whether you buy personally, via an SCI, or through a company. Changes afterwards trigger taxes.
• LMNP (Loueur Meublé Non Professionnel): furnished rental non-professional status gives access to accounting depreciation unavailable under standard property income (revenus fonciers), apart from the scheme created in 2026 for certain new or renovated homes let unfurnished.
• Notaire involvement is mandatory: unlike the UK, all French property purchases require a notaire (civil law notary) who handles conveyancing and registers the transaction.
• Taxe foncière (property tax), CFE (business property contribution for LMNP landlords), and taxe d'habitation (for furnished rentals) all apply in France.
• Non-resident landlords face French withholding rules and must declare French-source rental income even if they live abroad.

SCI: Société Civile Immobilière (Civil Property Company)

An SCI is a transparent civil property company used by families, business owners and investors to hold real estate collectively while avoiding indivision (joint ownership disputes). Key characteristics:

• Minimum 2 shareholders (can be spouses, family members, or corporate entities)
• SCI under income tax (IR): tax-transparent (each shareholder declares their share of rental income personally). Losses can offset other income (property deficit rule). No accounting depreciation, apart from the scheme created in 2026 for certain new or renovated homes let unfurnished.
• SCI under corporate tax (IS): can depreciate property, deduct all expenses, and accumulate profits at low IS rates (15% up to €42,500). Dividends taxed at 31.4% flat tax on distribution. Capital gains taxed at full IS rate at sale.
• Suited to: family succession, holding commercial property, combining with a holding company.

LMNP: Furnished Rental Non-Professional Status

Any individual renting out furnished property (minimum legal furnishing standard required) with annual revenues below €23,000 OR below 50% of total household income qualifies as LMNP.

Under the BIC real regime (the recommended option), you can:

• Depreciate the property components (structure 50 years, roof 25 years, fittings 15 years, furniture 5-10 years)
• Deduct all actual costs: loan interest, insurance, taxe foncière, management fees, accountancy
• Carry BIC losses forward 10 years against future LMNP income

The depreciation typically eliminates taxable rental income for 15-25 years on a leveraged acquisition.

Practical Example: Paris 15th Apartment

Property purchased for €450,000 (land €90,000 = 20%), rented furnished at €1,800/month

Without depreciation (micro-BIC at 50% flat allowance): €21,600 × 50% = €10,800 taxable. The annual tax saving reaches €3,000 to €5,000 depending on your marginal rate.

Since February 2025, accumulated depreciation is reintegrated into the capital gains calculation at sale:

• Taxable gain = Sale price − (Purchase price − Cumulative depreciation)
• The standard personal property gains abatements (based on holding period: 22 years for full income tax exemption, 30 years for full social charges exemption) still apply
• Consequence: the longer you hold, the less the reintegration penalty matters. For 20+ year holds, the LMNP real regime remains far superior to micro-BIC or bare unfurnished letting.

Strategy response: transferring the property to an IS-registered SCI before sale does not avoid the reintegration, because the contribution is itself a taxable disposal (and attracts transfer duties).

Step 1: Situation audit and regime selection

Before buying: we model the net after-tax return under each scenario (personal LMNP, SCI IR, SCI IS, furnished vs unfurnished) so you choose the right structure at the point of acquisition, the only time when the choice is truly free.

Step 2: LMNP / SCI registration and CFE

• SIRET registration with INSEE (mandatory for LMNP from first rental)
• CFE (Cotisation Foncière des Entreprises) registration: a local business tax on LMNP landlords, typically €100-€500/year
• SCI incorporation if applicable (articles drafting, INPI filing, bank account opening)

Step 3: Annual accounting and tax filings

We handle the entire filing chain, from monthly bookkeeping to submission.

Short-term furnished rentals (Airbnb, Abritel) have specific rules in France:

• Since the loi Le Meur (2025 income), a classified meublé de tourisme moves to the standard 50% allowance and the €83,600 micro-BIC threshold (2026), while unclassified tourist rentals are capped at €15,000 with a 30% allowance
• Paris restrictions: Paris requires a registration number (numéro d'enregistrement) and limits primary residence rental to 90 days a year since 1 January 2025
• Non-resident Airbnb hosts: French-source income must be declared in France
• Seasonal rental: if revenues exceed €23,000 and represent more than 50% of your total income, you become a LMP (professional furnished lessor): different tax treatment

If you live outside France but own French property:

• You still pay French income tax on French rental income (minimum rate of 20%, or the average French rate on worldwide income if lower, Article 197 A of the French Tax Code)
• Social levies of 17.2% apply to French rental income (18.6% for furnished lettings); owners affiliated to the social security scheme of another EEA state, Switzerland or the United Kingdom pay only the 7.5% solidarity levy, while other non-residents pay the full levies
• Capital gains on French property sales are subject to French non-resident capital gains tax (19% IR + social levies, with holding period reductions)
• We liaise with your home-country tax advisers for cross-border returns

The working capital requirement of a property structure is generally negative: rents are collected at the start of the month while charges and works are paid later, which gives a cash cushion. Major works, rental vacancy and calls for funds from the co-ownership (copropriété) can still create tension. Good management accounting anticipates these flows and organises financing accordingly (works loan, leasing for furnishing equipment, short-term credit lines). In 2026, interest rates, although down from the 2023-2024 peak, remain around 3 to 3.5%, which makes the leverage effect of borrowing less powerful and puts the focus back on the tax set-up.

The furnished rental market remains buoyant in the major cities (Paris, Lyon, Marseille) and in tourist areas, supported by student and professional mobility demand. Property dealers (marchands de biens) are seeing activity pick up after the 2023-2024 slowdown. Larger investors are turning to property holding companies to pool risks, organise taxation and prepare transmission. The energy performance rules (DPE, the French energy performance certificate) require energy-inefficient homes to be renovated: homes rated G can no longer be let from 2025, and homes rated F from 2028, which creates a significant need for financing and advice on support schemes (MaPrimeRénov', energy savings certificates known as CEE).

As soon as you hold several properties, or plan to diversify, a property holding company becomes relevant. The classic scheme is a holding company subject to corporate tax (IS) owning almost all the shares of several SCIs, themselves under IS. The benefits:

1. Dividends flow up almost tax-free under the parent-subsidiary regime: only a 5% share of costs and charges is taxed at 25% corporate tax, an effective rate of around 1.25%.
2. Pooled cash: the holding finances works or contributions for new acquisitions with the dividends it receives.
3. Split ownership (démembrement): the bare ownership of the holding shares can be gifted to the children while the parents keep the usufruct (the rental income), which sharply reduces gift duties.
4. Protection of personal assets: a legal separation between the investment structure (holding and SCIs) and personal wealth.

We support the creation of the holding (articles, registration, bank account), the transfer of existing SCIs into it (contribution or sale of shares) and the consolidated annual management.

Passing on a property portfolio is a major family issue. The main schemes we model are: gift with retained usufruct (the taxable base falls by 30 to 50% depending on the donor's age), the Dutreil pact (a 75% exemption on shares of a company carrying on an operating activity, including the building used for that activity, subject to holding commitments; an SCI that merely lets property is excluded) and temporary split ownership (a temporary gift of usufruct: at term, the usufruct ends and the donor, still bare owner, recovers full ownership). We also run succession simulations to anticipate the duties payable and the allocation between heirs, and we help organise the handover to the next generation (training the children in property management, shared management arrangements).

1. Choosing the wrong tax regime for the SCI. Many investors set up an SCI under income tax "by default". For furnished letting or a resale project in the medium term, an SCI under corporate tax is often more suitable (depreciation, deductible charges, exit through a holding). Conversely, an SCI under corporate tax penalises classic unfurnished letting with no plan to sell, since capital gains are taxed at 25% instead of benefiting from the progressive exemption after 22 years under income tax. We run a comparative simulation before any creation; an option for corporate tax can still be revoked up to the fifth year after it is made.

2. Forgetting depreciation in LMNP. By staying under micro-BIC (a flat 50% allowance), you lose the main advantage of LMNP (furnished non-professional letting): depreciation of the property over 20 to 30 years. On a €200,000 property, that is €6,000 to €10,000 a year of unused deduction.

3. Paying out dividends without an intermediate holding. Distributing dividends from an SCI under corporate tax directly to the individual triggers the 31.4% flat tax (or the income tax scale plus 18.6% social levies if more favourable). With a holding in between, dividends flow up almost tax-free and you keep control of the cash to reinvest.

4. Neglecting documentation. In a tax audit, missing leases, rent receipts or works invoices lead to charges being rejected and a heavy reassessment. Systematic digital archiving is the answer.

5. Underestimating rental vacancy. Two months of vacancy on a property let at €1,000 a month means €2,000 of lost rent plus ongoing charges, a 3 to 4% hit on annual profitability. Keep one month of rent as a safety reserve and relist the property two months before the tenant leaves.

✅ 150+ property investor clients including foreign and non-resident landlords ✅ Bilingual support: we advise in English and handle all French tax authority correspondence ✅ Full-service: from pre-purchase structuring advice to annual filings and sale optimisation ✅ Transparent pricing: from €150/month for LMNP, €200/month for IS SCI

Since 2018, France's wealth tax applies exclusively to real estate assets (Impôt sur la Fortune Immobilière, IFI). If the net value of your real estate assets in France (and worldwide for French tax residents) exceeds €1.3 million, IFI is triggered. The rates are progressive from 0.5% to 1.5%. For a Paris property portfolio worth €3 million with €800,000 in outstanding mortgage:

• Net taxable base: €3,000,000 − €800,000 = €2,200,000
• IFI due: approximately €8,800 (€2,500 on the 0.5% band from €800,000 to €1.3m, plus €6,300 on the 0.7% band above it), a blended rate of about 0.4%

IFI for non-residents: if you live outside France but own French property worth more than €1.3 million net, IFI applies to your French real estate only (not your worldwide assets). This is a frequent surprise for expatriates returning to their home countries while retaining French property holdings.

Deductible debts for IFI: property purchase loans are deductible, but consumer loans used to finance property (e.g., renovations funded by personal overdraft) are not automatically deductible. We structure your financing so that IFI-deductible debt is maximised.

SCI shares and IFI: SCI shares are IFI-liable assets. The SCI's debt (mortgage, bank loan) is deductible against the IFI value of the shares at the gross asset level. However, the so-called croisements de déductions (cross-deductions between personal loans and SCI loans) are restricted since 2018: we map your exposure carefully each year.

Background: Richard C., a British financial services professional, has lived in Paris since 2019. He owns three Paris apartments: one primary residence (Rue de la Pompe, 16th), one rental under LMNP (meublé non professionnel), and one rental SCI.

Total gross real estate: €4.8 million. Mortgage debt: €1.4 million. Net IFI base: €3.4 million → IFI liability: approximately €19,700/year.

Optimisation lever 1, principal residence 30% deduction: the primary residence benefits from a statutory 30% IFI allowance, calculated on the property's market value. This reduced his taxable base by €255,000 (30% of the €850,000 primary residence value).

Lever 2, SCI valuation: Richard's SCI had elected for the IS (impôt sur les sociétés) regime. Whatever the regime, SCI shares are valued for IFI at their market value, i.e. the market value of the property less the SCI's deductible debts; book value and accumulated depreciation do not reduce the IFI base. The work therefore consisted of documenting the property valuation and the SCI's debts.

Lever 3, debt review: only debts incurred to acquire, preserve or improve a taxable property are deductible (Article 974 of the French Tax Code). Refinancing the LMNP apartment to release cash would not have created deductible debt. Cash held in a euro-denominated life insurance fund is outside IFI, whereas unit-linked funds invested in real estate are taxable for their property share.

Net effect: the legitimate reduction comes from lever 1, about €2,500 a year at his 1% marginal IFI rate; levers 2 and 3 mainly secured the return against a reassessment, which is the point of a documented, non-aggressive approach.

If you are a non-resident investor (living outside France) who owns French real estate:

• IFI: taxable on French assets only (not worldwide). No obligation to declare if total French net real estate is below €1.3 million.
• Rental income: taxable in France under the non-resident flat-rate scheme (20% on net income up to €29,579 for 2025 income; 30% above). Tax treaties keep this income taxable in France, where the property is located.
• Capital gains on sale: subject to French CGT (19%) plus social charges of 17.2% in principle, or only the 7.5% solidarity levy for sellers affiliated to the social security scheme of another EEA state, Switzerland or the United Kingdom (exempt from CSG and CRDS since 2019). A special representative (représentant fiscal) is required for sales above €150,000 by non-EU residents.
• Annual declaration obligations: non-residents must file a Form 2042 with its annexes (for rental income) and a separate Form 2042 IFI if IFI-liable. We manage these filings for non-resident clients.

Annual compliance calendar for property investors:

We manage this fiscal calendar for investors with multiple assets.

Contact us for a free asset audit (bilingual support available) 📍 58 rue de Monceau, 75008 Paris | Book an appointment

See also: LMNP accounting in Paris | Holding tax optimisation | Wealth management for business owners