Buying your parents' house through a civil property company: advantages, steps and advice

Buying your parents' house through a civil real estate company is a solution favored by many families who want to facilitate the transfer of their assets. By opting for a civil real estate company, the management of the property not only becomes more flexible, but it also offers the opportunity to benefit from significant tax advantages. This approach is frequently chosen to optimize the transfer to heirs, reduce tax burdens and secure the family assets in the long term. Indeed, the civil real estate company allows families to better structure their assets and calmly anticipate the stages of the succession. Discover the key steps to successfully make this acquisition, while presenting the long-term advantages and the precautions to take to avoid common mistakes.

Understanding the SCI and its advantages for a family purchase

The real estate civil company (SCI) is a legal structure that allows several people to jointly own one or more real estate properties. Creating an SCI to acquire the family home offers many advantages, particularly in terms of management and transfer of ownership. Before tackling the practical steps, it is essential to understand how this structure works and the benefits it can bring in the context of a family real estate purchase .

What is an SCI and how does it work?

A real estate company (SCI) is a legal structure that allows you to hold a property in joint ownership. Unlike joint ownership, the SCI makes the management of family assets simpler and better organized. Several types of SCI exist, designed so that members of the same family can manage real estate together.

Advantages of buying in SCI for family housing

An SCI offers considerable tax advantages , such as inheritance tax reductions and the possibility of gradually transferring company shares. By distributing these shares between the heirs, the management of the property becomes more fluid and the risks of conflict are reduced. Each heir can thus hold a proportion of shares, defined by the company's statutes. In addition, in the event of separation or financial difficulties of one of the children, the SCI makes it possible to protect the family property, thus preventing it from being affected by personal situations such as a divorce.

Disadvantages to consider

However, an SCI also has disadvantages that should be carefully assessed:

• Setting up an SCI involves notary, lawyer and even accountant fees.
• Managing an SCI requires rigorous accounting and shareholder meetings.
• Private use of the property may be limited by the clauses set out in the statutes.

The steps to buying your parents' house in SCI

Buying your parents' house through a civil property company involves several essential steps, from the creation of the company to the official transfer of ownership. Following each phase carefully helps reduce errors and ensure smooth and compliant management of the inherited assets.

Constitution of the SCI

The first step in creating an SCI is to draft the statutes, which establish the legal framework of the company and define the roles of each partner. These statutes must specify the objectives of the company, its operating mode and the distribution of shares between the partners. In a family context, it is common for parents and children to be partners, with a distribution of shares considered to anticipate harmonious management in the long term.

Once the statutes have been drawn up, they must be filed with a notary or a business formalities centre (CFE). The costs associated with setting up the SCI include notary fees, legal publication costs and, if professional support is required, the fees of an accountant.

Real estate valuation

Before purchasing the property, it is strongly recommended to have it appraised by a real estate expert in order to obtain an accurate estimate of its value. This step not only helps to determine a fair purchase price, but also to facilitate the distribution of shares between the partners. An objective appraisal also helps to prevent possible future conflicts and reduce the risk of tax adjustments , a crucial aspect in the context of a family transfer . In addition, this estimate will have a direct impact on the transfer taxes to be paid during the transaction, a determining factor for the taxation of the acquisition.

Financing the purchase of a home via the SCI

Financing the purchase must be carefully anticipated. Several options exist, such as a bank loan or a personal contribution from the partners. In an SCI, it is common for each partner to contribute proportionally to their share. A family loan can also be considered to reduce costs and limit debt. Each option has its advantages and disadvantages: a bank loan, for example, offers interest deductions, while a personal contribution reduces overall debt.

Finalize the purchase and transfer of ownership

Once the SCI has been set up and the financing has been organised, the last step is to finalise the purchase of the house with a notary. The deed of sale formalises the transfer of ownership, and the property thus becomes the property of the SCI. This transfer includes transfer fees and gift taxes, depending on the structure chosen. The notary plays a key role, ensuring that all legal and tax formalities are complied with.

Buying a house in a civil property company is a methodical process that offers a protective structure for family assets and optimizes tax aspects. Each step must be followed carefully to ensure a successful acquisition.

Taxation and inheritance tax in the purchase of the parental home in SCI

Acquiring your parents' home through a SCI offers several tax advantages, particularly in terms of inheritance and donations. To take full advantage of them, it is important to understand the tax specificities that apply in this context.

Taxation of the purchase of a house via a SCI

When acquiring a parental property through an SCI, several fees and taxes must be taken into account. First of all, notary fees and transfer taxes apply, as with any real estate transaction. However, the tax regime of the SCI – whether income tax (IR) or corporate tax (IS) – plays a key role in the applicable taxation. Under the IR regime, each partner is taxed according to their share, which can be advantageous if the income generated by the property is low. On the other hand, under the IS regime, it is the SCI itself that is taxed, but it can benefit from depreciation of the property, which reduces the taxable base and thus limits the tax due.

Tax optimization for the transfer of assets in SCI

The SCI offers an interesting tax optimization when selling the real estate. By making progressive donations of the shares of the SCI, tax deductions apply, reducing inheritance tax . These deductions, calculated according to the length of ownership and the family relationship, make it possible to transfer assets at a lower cost. For example, a donation every fifteen years allows you to benefit from the deductions in force, thus reducing the taxable base.

Transmission in SCI: Inheritance rights and donation of shares

In the context of a transfer in SCI , inheritance tax can be reduced by choosing to transfer shares in the company rather than the property itself. This approach allows the assets to be gradually distributed among the heirs, thus reducing the tax burden. In addition, parent-child allowances are often possible, making this option tax-efficient. Thanks to this strategy of donating shares, the property remains in the family without generating heavy tax costs.

Capital gain in the event of future resale of the property

It is also essential to consider taxation in the event of a future resale of the property by the SCI. The capital gain realized will be taxed differently depending on the tax regime chosen. Under the IR, it is calculated with deductions linked to the holding period, an advantage for assets kept for a long time. Under the IS, the capital gain is calculated on the accounting basis without deduction, which can increase the tax burden in the event of resale.

By mastering these tax aspects, the purchase of the parental home in SCI allows the transfer of assets to be structured effectively. However, each situation is unique; it is therefore recommended to consult a tax specialist to determine the most appropriate tax regime.

Practical cases of tax optimization and family transmission

Buying your parents' property through a civil property company opens up many opportunities in terms of taxation and transfer. To take full advantage of these benefits, it is worth studying several practical scenarios, each adapted to specific situations.

Gradual purchase of parents' house by donation of shares

A first case consists of acquiring the parental home via a progressive donation of SCI shares. This process makes it possible to considerably reduce gift tax, by transferring part of the shares every fifteen years to benefit from tax deductions. Thanks to this mechanism, it is possible to transfer the entire property without incurring excessive donation costs, while maintaining a certain control over the transfer of the real estate assets. For example, if each parent transfers a share every fifteen years, the children can inherit the entire share with reduced tax costs.

SCI with bank loan for the purchase of the parental home

Another case is that of the purchase financed by bank loan. This choice makes it possible to distribute the cost of the purchase between the partners of the SCI, while reducing taxation in the long term. Indeed, the loan interest can be deductible from the property income of the SCI , thus reducing the taxable base. In the context of an SCI with IS, this deduction is even more advantageous since the corporate tax can be lower than the income tax. This method of financing allows the partners to build up a real estate portfolio without resorting solely to their own funds.

Purchase with SCI to protect family property in a complex succession

In the case of a complex succession, where conflicts between heirs are to be expected, the creation of an SCI to acquire the parental real estate is a wise solution. Thanks to the SCI, the shares can be distributed fairly between the heirs, making it possible to maintain the joint ownership and avoid a forced sale of the property. This mechanism can be particularly useful in the case of a blended family or disparities in the expectations of the heirs. By structuring the SCI in a balanced manner, each member of the family benefits from equal rights, thus avoiding potential tensions.

These cases show how the SCI allows for an optimal transfer of real estate assets, while benefiting from tax advantages . However, it is essential to adapt the transfer strategy according to the family situation and the asset objectives.

Mistakes to avoid when buying your parents' house through a civil property company

Although the SCI offers many advantages, certain mistakes can compromise the success of the purchase and management of the family home. Here are the main mistakes to avoid to ensure efficient and smooth management of the SCI.

Failure to properly anticipate the costs of creating and managing the SCI

Setting up an SCI generates various costs, such as notary fees, accounting fees, and sometimes legal advice fees. In addition, the SCI involves annual costs, such as keeping the accounts and organizing general meetings. Underestimating these costs can quickly affect the profitability of the SCI. It is therefore advisable to draw up a provisional budget to anticipate all expenses.

Neglecting the tax impact in the event of a future resale

Depending on the SCI with IR or IS chosen, the taxation of the capital gain when reselling the family home may vary. An SCI with IS is subject to a strict taxation regime on the capital gain, while an SCI with IR benefits from reductions depending on the length of ownership. It is therefore crucial to properly assess the tax implications from the creation of the SCI in order to choose the regime adapted to the wealth objectives.

Forget the formalities of SCI management

An SCI requires rigorous management to remain compliant with the legislation. Keeping accounts, organizing general meetings, and producing annual accounts are obligations that must be respected to avoid penalties. In the event of non-compliance, the risk of tax adjustment or dissolution of the SCI is real. It is therefore recommended to call upon a chartered accountant to manage these formalities and guarantee ongoing compliance.

Do not be accompanied by a notary or a tax specialist

The support of a legal or tax professional is essential to optimize the creation and management of the SCI . A notary can guarantee the conformity of the deeds and advise on the transfer of the property, while a tax specialist can help choose the most advantageous tax regime. Doing without this advice can lead to costly mistakes or family conflicts. For suitable support, it is advisable to compare offers and choose experts with experience in family wealth management .

These errors show that good preparation and professional support are essential to successfully purchase a family home through a civil property company and take full advantage of the benefits of this system.

Conclusion

Buying your parents' house through a civil real estate company (SCI) is an advantageous solution for optimizing the transfer of real estate assets while benefiting from certain tax advantages. This choice allows for a balanced distribution of shares, thus facilitating management between heirs and reducing the risk of conflict. However, the success of this approach depends on rigorous planning, an understanding of the tax and legal aspects, as well as anticipation of management costs. By avoiding common mistakes, such as a lack of administrative formalities or the absence of expert advice, families can take full advantage of the benefits of a civil real estate company to preserve the family home. For such a strategic project, support from a professional remains essential in order to guarantee efficient and compliant management of the family SCI.