SCI vs Buying French Property in Your Own Name: Which Is Right for You?

SCI vs buying French property in your own name: the real trade-off

Buying French property in your own name means you own the building directly: your name is on the deed, on the land registry, and on the mortgage. Buying through an SCI (société civile immobilière) means a company owns the building and you own shares in that company. The choice is not about tax rates - an SCI taxed as a partnership is taxed exactly as direct ownership is - but about what you gain in flexibility and transmission, and what you give up in simplicity, cost, and protection. For a single buyer purchasing a home to live in, own-name ownership is usually right. For co-buyers, investors, and families planning to pass property on, the SCI is usually worth its cost.

What follows sets each route against the other: what own-name ownership keeps, what an SCI adds, what an SCI costs that direct ownership does not, and the one case - the family home - where the SCI removes protections you would otherwise have by default. The mechanics of setting up and running an SCI are covered in our full buyer's guide and in our guide to what an SCI is.

Owning French property in your own name: what you keep

Direct ownership is the default, and its advantages are the ones an SCI has to earn back. You own the building itself, not a paper claim on a company that owns it. There is no company to form, no articles to draft, no manager to appoint, no annual meeting to hold, no accounts to keep - none of the formalism that a properly run SCI requires. You decide alone, and you sign alone, subject only to the ordinary rules that protect a spouse or co-owner.

Direct ownership also keeps the protections that attach to a home held in person - protections an SCI switches off unless they are painstakingly rebuilt by drafting. The spousal double-consent rule on the family home applies in full (C. civ. Art. 215); the surviving spouse's lifetime and one-year rights of habitation apply (C. civ. Arts. 763 and 764); the 30 % wealth-tax abatement on the main residence applies (CGI Art. 973, I); and, for an individual entrepreneur, the statutory unseizability of the main residence against business creditors applies (C. com. Art. L 526-1). Each of these is lost, or must be reconstructed, once the home sits in an SCI. If the property is a single-owner home and none of the SCI's advantages are in play, own-name ownership is not a fallback - it is the correct answer.

What an SCI adds over owning in your own name

The SCI becomes worthwhile where direct ownership reaches its limits - a second owner, a financing structure, a transmission plan. Five advantages, each traceable to a concrete need.

Pooling capacity between several buyers

An SCI lets several people carry an investment none of them could carry alone, and lets them contribute unequally. Parents can associate with their children to help finance a purchase the children could not fund on their own; a group or a family can combine resources to acquire or build a property, then occupy it or let it. The funding can be staged - capital paid in as the project needs it - and topped up through shareholder loan accounts rather than fresh capital.

Separating the property from your personal creditors

Because the company owns the building, a shareholder's personal creditors cannot seize the property itself - they can only reach the shares (C. civ. Art. 1843-3 makes the contribution a genuine transfer into the company's patrimony). A forced sale of shares in a family SCI is an unattractive prospect for any creditor: the market is closed and the shares are worth net asset value at best. The screen has limits - a contribution made to defeat existing creditors can be attacked as a fraud on their rights (C. civ. Arts. 1341-2 and 2224) - but for ordinary asset organisation the separation is real.

Avoiding the deadlocks of undivided co-ownership

Two or more people who buy directly end up in undivided co-ownership (indivision), where any co-owner can demand partition and force a sale, and where day-to-day management needs qualified majorities. An SCI replaces that fragility with a company that can be managed by a designated manager, whose entries and exits are controlled by approval clauses, and which is not dissolved by a co-owner's death (C. civ. Art. 1870). The property is held at one remove, through shares the founders can shape.

A choice of tax regime direct ownership does not have

An individual letting property is taxed on the rental income as property income under income tax, full stop. An SCI has the same default - each shareholder taxed on their share of the profit (CGI Art. 8) - but can elect company tax where that is more favourable (CGI Art. 239), which it often is while the company is repaying its acquisition debt, because company tax allows the building to be depreciated. The option is a real lever, in principle irrevocable, and is analysed in our guide to SCI taxation.

Organising transmission through shares in the company

This is where the SCI most clearly beats direct ownership. A building passed on directly falls into the estate as one indivisible asset. Shares in an SCI, by contrast, can be given away gradually, in tranches, valued net of the company's debts, against the parent-child gift allowance that renews every fifteen years (CGI Arts. 779 and 784) - so a debt-financed SCI can pass to the children at little or no gift-tax cost while its shares are still worth little.

The shares can also be split between two rights, and this is the technique that makes the SCI a transmission tool. Ownership divides into the usufruct (usufruit) - the right to use the property and take its income - and the bare ownership (nue-propriété) - ownership stripped of that use. Parents typically give the children only the bare ownership of the shares and keep the usufruct for themselves: they go on receiving the rental income and voting on how the profit is allocated, while the underlying value passes to the children. Gift tax is charged on the bare ownership alone, valued by the statutory age scale of CGI Art. 669 - the older the parent, the higher the taxable fraction, which is why the gift is made early. At the parents' death, the children's bare ownership becomes full ownership automatically and with no further tax (CGI Art. 1133). Direct ownership offers none of this granularity: the whole building simply falls into the estate. The full mechanics are set out in our guide to passing property to your children.

Own name or SCI? A profile check

Pick the description closest to your purchase - the check shows which route usually fits, and the point that decides it.

What an SCI costs you that own-name ownership does not

Every advantage above has a price, and a buyer comparing the two routes should see the full cost before choosing.

Liability is unlimited, not capped. The SCI is not a limited-liability vehicle. Its shareholders answer for the company's debts without limit, in proportion to their shares (C. civ. Art. 1857) - creditors must first pursue the company and fail (C. civ. Art. 1858), but there is no ceiling at the amount invested. A direct owner is liable for their own debts; an SCI shareholder is liable, after the company, for the company's.

Formalism you must actually keep. A direct owner keeps no accounts and holds no meetings. An SCI must: decisions properly taken, minutes kept, accounts maintained, and a written annual report from the manager to the shareholders. The manager binds the company within its purpose, and limits on the manager's powers do not bind third parties (C. civ. Art. 1849); anything beyond those powers needs a collective decision, in the silence of the articles by unanimity (C. civ. Art. 1852).

Your shares are illiquid, and can trap you. A direct owner sells the building on the open market. SCI shares are not negotiable instruments - they transfer by written deed, and to an outsider only through the approval procedure in the articles. A minority shareholder in a family SCI can find the shares worth less than the corresponding slice of the property, and hard to sell at all.

Financing is narrower. An SCI cannot use the subsidised routes to home ownership - no home-savings-plan loan, no regulated loan - and falls outside the consumer-protection rules on property credit. Banks lend to it on commercial terms and habitually take the shareholders' personal guarantees, which puts back the exposure the company was meant to contain.

A falling-out can dissolve the company. A serious, function-paralysing dispute between shareholders is a ground for judicial dissolution (C. civ. Art. 1844-7), and dissolution carries immediate taxation of profits and a 2.5 % partition duty on the distributed assets (CGI Art. 746). A direct owner faces no such risk.

SCI vs own name: side by side

SCI vs own name: does the company really protect you?

The SCI is often bought for protection it does not always give. Pick the belief closest to yours - the check tells you what the law actually does.

Frequently asked questions about SCI vs personal ownership

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal or tax advice. The choice between own-name ownership and an SCI depends on the buyers, the property, the financing and the estate plan. Always seek qualified legal advice - and coordinate with the notary handling the purchase - before deciding how to hold French property.