Real estate investment: should you buy directly or through a company?

‍

Real estate investment is often a structuring step in a wealth journey. Main residence, rental property, building a family heritage or preparing for the transfer: behind the same project there are in reality very different objectives.

However, the choice of the method of acquiring the property, directly or through a company, has major legal, fiscal and asset consequences, which are sometimes irreversible.

Direct acquisition: apparent simplicity, real rigidity?

Direct acquisition consists in buying real estate in your own name. The investor is then fully owner of the property and bears alone all the charges, risks and taxation associated with the operation.

Two operating methods can be envisaged.

The naked rental results in a taxation of rents in the category property income, at the progressive income tax scale, which can reach 45%, to which are added social security contributions at the rate of 18.6%. The possibilities of deduction are limited and no depreciation of the property is allowed.

The furnished rental falls under the category industrial and commercial benefits. Under certain conditions, it allows the property and furniture to be depreciated, which can significantly reduce the tax base.

Direct investment thus has the advantage of being simple and immediate to implement. However, it quickly reveals its limitations when the project is ongoing, involves several stakeholders or is part of a structured transmission logic.

Investing through a company: a long-term asset logic

Acquiring real estate through a company leads to a different approach to asset ownership. The property is no longer owned directly, but by a structure whose partners own shares.

Owning shares makes it possible to avoid the indivision regime, whose rules are rigid and frequently a source of obstacles. It also facilitates the organization of the transfer, since the shares are more easily distributed than a building owned jointly.

The use of a company also makes it possible to organize the governance of real estate assets. The statutes define management powers, the appointment of managers and voting rights, ensuring lasting control of important decisions.

Finally, this structuring reinforces the protection of the spouse or partner, by avoiding uncontrolled entry by the heirs into the management of the property at the time of death.

Real estate civil society: the heritage tool par excellence

The real estate civil society is the structure most commonly used to hold and manage real estate assets with several people. It offers great statutory flexibility and is suitable for both a family investment and a long-term conservation strategy.

In terms of taxation, two options coexist.

The income tax SCI is suitable for bare rentals. Rents are taxed in the hands of the partners in the property income category. This regime is simple but highly taxed when the partners are subject to a high marginal bracket.

SCI can also opt for corporate tax. This choice allows to depreciate the property, to deduct almost all expenses and to capitalize the results at the corporate level. On the other hand, the taxation applicable in the event of resale is heavier and must be anticipated from the start.

The choice between income tax and corporate tax depends on the level of taxation of the partners, the length of ownership envisaged and the exit strategy selected.

The family SARL: an alternative for furnished rentals

The family SARL is reserved for a strictly family circle. It is of particular interest for furnished rental projects, including seasonal rentals, while remaining subject to income tax.

It allows the depreciation of goods and furniture, as in a classic BIC regime. On the other hand, the activity must be exclusively commercial, which excludes any naked rental.

This regime remains fragile: any change in shareholding may result in the loss of status. The family SARL is therefore an effective tool, but within a precisely defined framework.

Companies subject to corporate tax: investment and capitalization

Some structures, such as SAS, make it possible to carry out a naked or furnished rental activity indifferently while offering a great deal of statutory freedom.

Rents are taxed at corporate tax, at the reduced rate of 15% under certain conditions, then at the standard rate of 25%. Partners are only personally taxed in the event of distribution.

This scheme is particularly suitable for investors who are highly taxed or who want to capitalize on income in a long-term logic. However, the tax consequences associated with resale must be integrated as early as the acquisition phase.

Practical case: investing in advance of transmission

A couple may choose to acquire a property through a company in order to anticipate transmission to their children. The parents designate themselves managers and organize by statute the distribution of powers and voting rights in order to maintain control of management.

The children are then gradually associated by donations of shares, preferably in bare ownership. This strategy reduces the taxable value of the transmission while maintaining revenue and control.

Upon death, the transfer takes place in an organized framework, without inheritance division, ensuring the sustainable management of real estate assets.

There is no universally ideal structure for investing in real estate. On the other hand, there are coherent or inconsistent choices with regard to a given objective.

Buying directly responds to a logic of immediate simplicity. Investing through a company is part of a logic of strategy, transmission and long-term control.

The legal form should never be chosen out of habit, but at the end of a global reflection integrating taxation, governance, transmission and exit.

We remain at your disposal to assist you in the analysis of your situation and the structuring of your real estate project.