Shared Ownership of a Property

Group purchase of a property in France requires careful consideration, as the French inheritance laws are designed to ensure that all ownership of real estate is divided amongst family members to stric, fixed rules. Property cannot be left at the owner’s discretion.

This makes it hazardous to enter into informal group ownership arrangements, for example with a nominee owner acting for the other members.

The usual way to solve this problem is by forming a specific form of French company called a Societe Civile Immobiliere (SCI).

As long as no commercial activity is undertaken by the company, then once this is done there are relatively few formalities, but setting up the company needs professional advice.

Commercial activity includes rental of the property, there has been increasing surveillance by the French authorities of unregistered informal rental of vacation property in collaboration with tax authorities elsewhere.

An advantage of shared ownership concept is the increased use of a property and the shared operating costs means that rental income is not usually a high priority for the owners as a means of offsetting costs.

Commercial property such as vineyards is possible with shared ownership, but this requires a different form of structure.

An SCI permits a shares in the property to be sold independently. Under French law these share transfers are looked on as a property transfer rather than a straightforward share transfer and there are more formalities to be covered, including a tax of 4.8% on the share value.

This is less than the taxes and duties on transfer of the property itself would have been. Although paid by the buyer, this needs to be considered when etablishing the selling price for a share.