In France, a civil society of real estate investment (SCPI) is a structure of mutual investment.
The purpose of a civil society of real estate investment is the acquisition and management of a real estate professional. The management company takes care to collect money from individuals, find assets in which to invest, manage this estate and redistribute the rents and/or tax benefits to its unitholders, "associates".
In recent years the SCPI have gained popularity among french investors because of their high yields. Their remunerative rates has certainly declined over the last decade, but relatively less compared to other financial investments.
The SCPI is often called rock paper.
- 1 Form of the SCPI
- 2 Values of the SCPI
- 3 Liability of carriers
- 4 What are the benefits?
- 5 What are the disadvantages?
- 6 The risk of the SCPI?
- 6.1 Lower prices on part of the SCPI
- 6.2 Reduction in the dividends paid by the SCPI
- 6.3 Failure of the Manager of the SCPI or the management company
- 6.4 The unitholders have a financial responsibility
- 6.5 The simultaneous massive resale of shares by holders
- 6.6 The Supervisory Board and its responsibilities
- 6.7 Lack of capital guarantee
- 6.8 Investing in REITs is especially a long-term investment
- 7 Is this a good choice?
- 8 SCPI "Malraux.
- 9 SCPI 'Méhaignerie '.
- 10 SCPI "Robien.
- 11 SCPI «Scellier»
- 12 SCPI «Duflot»
- 13 SCPI "Pinel.
- 14 SCPI of DEFICIT
- 15 Conclusion:
- 16 SCPI performance
- 17 SCPI specialized:
- 18 Conclusion:
- 19 Taxation on property income
- 20 Taxes on financial income
- 21 Taxation on capital gains
Form of the SCPI
After its creation by the founders, the SCPI establishes an information note by the financial markets authority who affixed his visa, allowing him to publicly call on savings.
There are two forms of SCPI:
SCPI in capital fixed
to achieve capital ceiling established by its statutes, the SCPI will successively open capital increases of a volume and duration be set by the management company. Its capital will make progress in fits and starts, and between two capital increases or when the ceiling is reached, the capital will remain fixed. Thus, if a partner wants out, it will take to find a buyer (or several) which would take (nt) shares in a way that the capital does not change.
at any time, the SCPI may issue new shares or redeem units to allow a partner to get out. Limits exist for the variation of its capital: a high limit, the capital ceiling, and a limit low Multicriteria. When a partner withdraws, the SCPI redeems his shares and it issues new shares to people who, at the same time, subscribe.
Values of the SCPI
There are different values in an SCPI:
- nominal value
- realizable value
- market value
- value of reconstruction
There are also different prices:
- purchase price
- withdrawal price
The face value is the value of the share during the creation of the SCPI. If you create an SCPI with 1 000 shares and a capital of €1,000, the nominal value of the share will be €1, but with time, the nominal value does not change, however the valorization of the SCPI is changing.
Purchase price = value nominal + bonus issue
The premium includes the upgrading of heritage, as well as the cost of purchasing:
The amortization of the costs of constitution, the costs of research and acquisition of real estate plus the underwriting commission.
Withdrawal price = value of the share – subscription fees, variable depending on each SCPI (10% on average)
Value = value of real estate, assessed by an expert
Realization value = value + other assets held by the SCPI (Treasury)
Replenishment value = value + estimate of fees generated by a possible reconstitution of its heritage
In short, what to remember:
The purchase price corresponds to the value of the assets + fees
The withdrawal price = purchase price – fees
The net return is calculated on the purchase price
Liability of carriers
By exception to the common law liability of the partners of civil society (i.e. unlimited), the vast majority of the SCPI provides responsibility for their unitholders to be limited to the single amount of their participation in the share capital of the company.
Example: The liability of the partners cannot be questioned if the SCPI has been previously and unsuccessfully pursued.
The liability of each partner to third parties is committed based on its share in the capital and is limited to the fraction of capital said he owns.
What are the benefits?
SCPI investment is worth about 5 percent a year to investors, which is much higher than many investments.
In summary, here is a list of the main:
- Mutualisation of risks
- Easy to buy
- Low entry ticket
- stable tenants (commercial lease)
- No management to achieve
- Interesting performance
- Possible funding for a credit purchase
- Possibility of reselling through the secondary market
- Possibility to have full insurance SCPI
What are the disadvantages?
- Resale of shares
- Opacity of the valuation of the shares (accounting calculation)
- Often high entrance fees (10%)
- Stalled after at least 3 years
- Limited secondary market
- Valuation of shares, does not mean value of sale of shares
- Investment sensitive to rising rates
The risk of the SCPI?
Lower prices on part of the SCPI
Good financial health of an SCPI is strongly linked to the real estate situation. It follows cycles of increase or decrease, which can encourage the SCPI to lower their share prices, which does not guarantee the capital originally invested. Fortunately, as long as you have shares, a capital loss will remain latent and will be at no real loss.
The investment horizon is a decade at least as it is generally advised.
Reduction in the dividends paid by the SCPI
A decline in rental income is another risk that may occur due to a decrease in the financial occupancy rate or a drop in rents paid by tenants. Management companies may however anticipate and counter a drop in performance, through the active sharing of own risk to the SCPI as well as by a real estate management.
Where a decrease in revenues is needed, managers will tend to lower the price of shares in the secondary market for the SCPI with fixed capital for example, so as to ensure a performance sufficient for new subscribers. These will see so a great opportunity for the acquisition of the shares but the elders will struggle to sell or will suffer a loss.
Failure of the Manager of the SCPI or the management company
The law provided for the possibility of a transfer of management. Indeed, in case of failure of the owner, responsible for management of the SCPI will be transferred to another structure approved by the AMF, even if this scenario remains very rare, especially on large structures.
The unitholders have a financial responsibility
The statutes and regulations of the SCPI, often stipulated that associates have a responsibility in its own right. However, it is limited to the amount of their contribution in the capital of the SCPI.
There may be a risk if a lot of unitholders begin to resell their share at the same time (crash). The management company is obliged to resell the stock to repay holders of share.
The Supervisory Board and its responsibilities
The responsibility of supervisory board members is not null in law, despite the fact that this Council must refrain from any act of management. The necessary conditions for responsibility are difficult to meet, the nature of the risk associated with a corresponding investment in REITs as a real estate investment.
Lack of capital guarantee
The capital injected into an SCPI is not guaranteed. Despite the current success which they are subject, the SCPI are a savings product related to real estate cycles. Remember that between 1992 and 1998, real estate crisis, the value of the units was divided by two for most structures. However, at this time the AMF rules were not as strict and investors who had not sold eventually recovered that loss.
Investing in REITs is especially a long-term investment
Finally, there is no need to consider investing in REITs in the short term. It is necessary to wait a few years after the acquisition of shares to make the operation profitable resale. In most cases, it is advisable to keep full ownership of its shares a dozen years at a minimum, well we can become a beneficiary after 3 or 4 years.
SCPI and credit
Legally, an SCPI doesn't have the right to use the loan to finance its projects. Acquisitions must be completely covered by their capital, constituted by the contributions of the participants. However, an individual may subscribe to real estate credit to buy shares of REITs. The SIIC, on the contrary, may use the loan to acquire buildings, but this prohibits the holder to subscribe to a mortgage to finance the purchase of share.
Is this a good choice?
Yes the SCPI is overall a good choice for performance.
SCPI "tax." Tax REITs provide a tax advantage (Duflot/Pinel, Malraux, Deficit land) without investing directly. They are an alternative to a real estate investment of on-line tax exemption.
These REITs are mainly buying real estate homes new or old to rehabilitate and intended for rental to individuals.
The offered yield is often lower than for an SCPI of performance but they offer to their unitholders a tax cut. However this tax reduction is conditioned by the holding period for the shares. These REITs must therefore be considered in a long-term perspective. Indeed, like all SCPI is a long-term (15 years) investment support which must be acquired with a view to diversification of the heritage. Specifically, the resale of the shares on the secondary market exposes the Subscriber to a risk of capital loss and the questioning of the tax advantage.
It is the SCPI (valid) Malraux, (most valid) Méhaignerie, Robien (most valid), Scellier, Duflot(plus valable), Pinel (valid), (valid) land deficit SCPI (most valid)
The "Malraux" SCPI aims to distribute to partners the tax benefits resulting from the so-called "Malraux Act."
This type of SCPI estate consists of old residential buildings in conservation areas; the amount of work is the fiscal deficit which is shared between the partners. These homes are rented to private individuals.
The life expectancy of an "Malraux" SCPI is a dozen years.
The SCPI (civil society of investments in real estate) have exclusive object the acquisition and management of a real estate rental.
The Malraux device has been implemented to rehabilitate the historical parts of city centers and participate in the preservation of french heritage.
Investment Malraux is to finance the acquisition and rehabilitation of old residential buildings, often located in the center of historic cities. These buildings must be then rented to third parties for a minimum period of 9 years, at the end of which they can be owner-occupied or sold.
The subscription in full ownership of shares of REITs in the private taxpayer assets opens right to a tax cut that rate in 2015 is:
|22%||Property located in the area of protection of architectural, urban and landscape heritage (ZPPAUPS)|
|30%||Property located in a conservation area and the ancient degraded areas|
The discount applies on the amount of the subscription assigned to reduction (renovation costs) eligible expenditures within the limit of € 100,000 per year.
In case of acquisition, in respect of the same year, a well live through the Malraux device and shares of SCPI Malraux, the overall amount of selected eligible expenditure is also capped at € 100,000.
Objectives and assets
The subscription of shares of SCPI tax type Malraux may be considered by an investor wishing to both a tax reduction (in return for a commitment to conservation of 15 years) but also:
- Additional regular income immediate or long term using:
-A capital available
-A savings capacity
- A diversification of its heritage combined with simple management and secure
- A real estate to restore high standing in Center of dynamic and significant settlements
- Access to a market that is usually reserved for institutional investors or very high-tax
- A mutualisation of risks by diversification of investments on several geographical areas
- The lure of a "safe haven" investment the stone-paper:
-To protect themselves from the volatility of financial markets
-Take advantage of the current market and pretend to value long term to the resale of the shares.
- The choice between a purchase in cash or credit to optimize investment and reduce the expense of initial cash.
Beyond the tax benefits, the profitability of this investment can be appreciated through any dividends paid. Dividend is not guaranteed, it is decided by the General Assembly and can evolve the rental conditions of the buildings (date of rental, the amount of rents, occupancy rates) and rental income resulting upside down. Second this SCPI may be friendly in terms of the amount of capital, or the resale of shares, either during the liquidation of the SCPI. This amount is not guaranteed and will depend on the evolution of the market of residential property, by cyclical nature, on the duration of the investment.
Thus the profitability of the SCPI may not be appreciated on all of its shelf life, not only initial tax reduction.
The interest to acquire on credit:
- Property income loan interest deduction
- Deduction of actual costs involved in the creation of a land loss applicable to overall income within the limit of €10 700.
- Rents and tax cuts enables to finance part of the acquisition
- The increase in family protection of the Subscriber through the death of the credit insurance.
Example SCPI Malraux Urban Prestigimmo 2 the company URBAN PREMIUM
SCPI 'Méhaignerie '.
The goal the SCPI 'Méhaignerie', the name of Pierre Méhaignerie, was to benefit members of the double tax advantage of Méhaignerie Act (which was intended to promote the construction of new rental housing). The law is no longer applicable, there is therefore more creation or development of REITs 'Méhaignerie', but simply the existing management.
The secondary market of shares is generally deals with mutual agreement, knowing that the buyer does not have the initial tax and cannot, pending liquidation, that benefit from the income and expected value to the output.
These REITs have a life expectancy of twelve to fifteen years in general.
Established by article 91 of the Act planning and habitat, "Robien" scheme, for partners who subscribe, as of April 3, 2003, the initial capital or capital increases of the SCPI, a deduction in respect of the depreciation of their subscriptions.
This deduction, which is applied to irrevocable option of the partner exercised when filing his return of income of the year of its subscription, equals to 8% during the first five years and 2.50% for the next four years to 95% of the subscription price. Then and as long as the terms of rent are met, the partner may continue to benefit from the deduction to the rate of 2.50% for two three-year periods.
During the period of depreciation:
- the standard deduction on property income rate is reduced from 14% to 6%,
- improvement expenditures are deductible under the conditions of ordinary law,
- spending of reconstruction and expansion for which a subscription has not been opened is not eligible for a deduction for depreciation.
The granting of this advantage is however subject to the condition that 95% of the subscription, valued without regard to the costs of collection, used exclusively to finance the purchase of new housing or in the future to commitment and completion state of:
- the company of rent acquired housing not furnished for 9 years for use of primary residence for tenants in complying with the ceilings for rents set annually by Decree.
When a subscription is assigned to several investments, rental of the company commitment must be taken separately for each unit.
The company must provide to each partner a certificate in duplicate justifying, for the previous year, the shares.
- partner to retain all of its units until the end of the period of the contract subscribed by the company for the last housing acquired through its subscription.
The commitment of the unitholder is found on a document attached to the return of income of the year during which the shares have been subscribed.
If the partner assigns all or part of his shares before the expiry of the period covered by its commitment to conservation of the securities, the tax benefit is questioned by the recovery in revenues, one year following this event, the deduction in respect of the depreciation of its subscription received. If the transfer of the shares takes place in one or other of two three-year periods for an extension of the scheme, only deductions during the whole of the relevant period are questioned.
The SCPI Scellier succeed to the SCPI Robien and allow investors to benefit from the tax system of the law Scellier through an SCPI.
The characteristics are similar, but the tax system is different: the reduction in taxable income under the Robien law is replaced by a tax reduction of 25% over 9 years (2.78% per year).
Some Scellier SCPI, in the sector said intermediate (under the conditions of rents and tenants in the Borloo device resources), eligible for a tax reduction of 31% (25% over the nine first years, then 6% more the three years is 2% per year).
The main disadvantage of the detention of SCPI Scellier (as well as for the Robien SCPI) is the difficulty of resale, the purchaser of the shares with the fiscal carrot.
The rate of the tax cut suffered a decline under the provisions of the finance law for 2011 regarding the "tax loopholes." For the years 2011 and 2012, the rate is differentiated according to the energy performance of the homes. Thus the BBC housing (buildings low consumption) a rate of 22% for 2011 and 20% for 2012. For others, the reduction is only 13% in 2011 and 10 percent in 2012.
Following the different strokes of tax end of 2011 Government planes Fillon to reduce public deficits, the device Scellier was once again amended. The tax reduction will be reduced to 13% of the subscription price in 2012 before the final deletion of the device in 2013. These changes concern on the whole device Scellier and is applicable to investments in share of SCPI Scellier.
The SCPI Duflots succeed to the SCPI Scellier and allow you to benefit from the tax system of the law through an SCPI Duflot. The tax cut is 18% over 9 years.
The SCPI Pinel succeed to the SCPI Duflot and provide Pinel law tax system through an SCPI. The tax cut is 18% over 9 years.
To take advantage of the benefits of the "Pinel" law, french tax resident. The SCPI Pinel allows the investor to get a tax cut spread over 9 years with a rental risk relatively low because shared. The investor collects rent for the duration of detention. Investment in new buildings that are then rented to private individuals. It is a management company that deals with select property, manage and sell them.
The subscription of shares of SCPI may be considered by an investor having either a capital available, either a capacity savings and looking first for a reduction of tax on income but also regular additional income, immediate or long term and a simplification and a security of its wealth management.
The strengths of the SCPI PINEL
The SCPI Pinel has for goal the constitution of a rental real estate made up of nine residential buildings (BBC standard and in a specific geographical area, see the Pinel law) with a good potential for revaluation and meets requirements of overall energy performance (new or restructured properties) and subjected to a cap rents and resources of tenants for the development of a consistent supply of housing with the needs of the market.
The Pinel allows, with a commitment from ownership of shares of the SCPI on a period estimated at 17 (or 20 years if it is extended), to benefit from his tax cut, as well as a live investor. Your investment in the SCPI allows you to benefit from a tax reduction equal to 18% calculated on the basis of 100% of the amount subscribed within the limit of €300,000 (per taxpayer and for a given taxation year) and distributed linearly over a period 9 years.
Fiscally, the share of rent is subject to property tax and real estate capital gains when you sell. For the share of interest income, it is subject to the taxation of securities.
The collective investment enriches this tax incentive measure of all its intrinsic qualities:
- A real estate investment for an amount smaller than a direct real estate investment.
- Benefit from a tax reduction. : Tax of 18% reduction calculated on the basis of 100% of the amount subscribed within the limit of €300,000 and distributed linearly over a period of 9 years. If it is extended to 12 years (passed in AG), the tax cut rises 21% subscription made within the limit of €300,000.
- Collect additional income from the rental of buildings: Distribution on decision of the General Assembly
- Saving without concern for management: rents paid are net of fees (no unforeseen or additional fees)
- Mutualize the risks related to the real estate market: Detention of shares in several types of accommodations and several geographic areas
- Stone – Haven investment: protect themselves from the volatility of the financial markets – take advantage of the current market to lay claim to a long term capital gain
- Purchase cash or credit: in case of purchase on credit, loan interest are also deductible:
Depreciable (current rate of 2.90% * on 15 years – up to 25 years)
Ultimately (current rate of 3.30% * from 15 to 18 years – maximum recommended 15 years.) * Nominal rate (excluding fees and cost ADI)-19/08/2015
Example of operation one SCPI, the SCPI multihabitation 9
SCPI of DEFICIT
Combining the benefits of the common law and the mechanism of the SCPI, the land deficit SCPI may be appropriate for several profiles.
The SCPI land deficit is aimed establishing a rental real estate assets consisting mainly of apartment buildings or part of buildings to restore.
The investor through the subscription of shares of SCPI is a property value while benefiting from the so-called tax "land deficits."
The benefits of the common law and the tax SCPI:
The advantage is that the SCPI is not a "tax shelter." the subscription and the deduction is not limited: the investor can clear land revenues without limits which allows to deduct all the expenses of renovation of land revenues each year. Beyond and the 1st year the deficit may be charge on total revenues (within the limit of € 10 700). The postponement is possible on land revenue for 10 years. If the operation is carried out on credit, loan interest are also deductible. This allows to save social security payments which would have been levied on cleared land revenues. In this case real estate target town centres allowing a revaluation of capital the resale of shares and long-term provides a profitable rental approximately 2.5%.
The available SCPI 3 are not at all to the same goal and going to distinguish this.
By buying shares in one of them, you will be entitled to a share of the rent it will be cashed. The goal is to raise performance.
This rental income (rent) you will be donated in general each quarter.
Buying shares of SCPI also allows to invest in real estate without concern for management.
Managers take care of everything: find tenants, maintain the buildings…
The SCPI of performance have attractive profitability between 5% to 6%, see more!.
This type of SCPI estate consists of offices, warehouses or business or commercial premises. These premises are rented to companies, administrations or traders.
The life expectancy of a performance SCPI is usually more than 50 years. The SCPI of performance is therefore an active long term, see very long term.
There are 82 SCPI performance. In 2010 the average income was 5.63% and the revaluation of the shares of 5.52% 11,15% overall performance.
The acquisition and management of real estate assets of business (offices, walls of stores, warehouses,…) in order to distribute a regular income to the partners. The SCPI collecting money from investors which it redistributes rents.
REITs specializing in a place
To rank among the SCPI to performance, a regional SCPI is a real estate investment company that focuses on a specific geographic area. With this strategy of proximity, this type of SCPI takes full advantage of the dynamism of the region where it is invested. In view of the evolution of the real estate market, noted that some regional cities are more stable and offer better prospects for growth than the national market as a whole.
The managers of the regional SCPI have real expertise in local markets and are more reactive than the major national groups. This also allows them to select their tenants more effectively and optimize the management of their fleet. Performance of the SCPI regional register in time and play as much performance as on the valuation of the stock.
In terms of capitalization, the regional SCPI represent a small share of the SCPI (less than 6%). In comparison, regional SCPI represent only 4% of collection of the SCPI to performance in 2005 compared to 80 percent for the so-called SCPI diversified classic.
SCPI specializes in a type of investment
The company SCPI investments can lift on one or more categories for example in local businesses, offices, warehouses or commercial premises. Their main goal is the distribution of regular income to the partners.
The SCPI of dwelling they investment to rent to individuals. Such REITs is composed of a residential real estate. With your contribution (in the form of credit or capital) the Manager of the Scpi will so buy housing rented out will generate rents that investors will share.
The valuation SCPI aims to make benefit term partners during the liquidation of the heritage of the valorisation of capital is to tell one more value.
Real estate is a market, also the dates and terms of purchase, as the period of liquidation of the company, they are critical parameters.
The real estate of this type of SCPI usually consists of apartments in the best neighborhoods of large cities. There is a limited distribution of income as if you'd expect gains, the kind of real estate in question is not very productive of income. These premises are rented to individuals, international companies or embassies.
The life expectancy of a valuation SCPI is usually fixed at around 15 years.
These different SCPI are interesting.
The SCPI are said to be "fiscally transparent". They are therefore not taxed directly and it is each partner (unitholder) who is liable for tax on income (mainly land) and on capital gains when the SCPI sells a property or when the partner sold his shares. Article is very technical, I warn you, and it is only for indicative purpose.
Every year, management companies indicate to investors the amounts to be reported with an explanatory notice for their tax return. Everything is therefore simpler to unitholders.
Taxation on property income
Associate, individual emerged mainly on land revenues from rents collected by the SCPI reduced loads in fiscal year overall. It will have to choose between the micro-foncier or the real plan based on some criteria developed below.
He may also be asked to pay the tax on the financial products of the investments of the SCPI and may opt for the withholding.
The micro-foncier plan
You are subject to this regime if the gross property income you earn are less than €15,000 per year for real estate held live. The corresponding taxable income is set at an amount equal to the amount of these reduced revenues from a reduction of 30%. The amount is to BE online on the tax sheet N ° 2042.
The unitholder of SCPI may opt for a micro-foncier plan if it meets the following conditions:
- Being a property owner real estate which he draws a naked rental property income
- All of land gross income does not exceed €15,000 in respect of the taxation year (SCPI + live buildings)
- Shares of SCPI and the detained building live should not benefit from a specific tax system (Malraux, Besson, IRA, Robien, Girardin, Demessine, LMP, Leaseback, Censi Bouvard)
Investors receiving more, in the course of the year, property income of property held live (property rented or sold) can no longer benefit from the system of the micro-foncier for the land revenue of the SCPI. The real tax regime applies in fact.
Similarly those with only land revenue from SCPI are excluded from the plan of the micro-foncier. However, they receive an exemption from the tax authorities, under certain conditions, to file a statement of income tax no. 2044 and can wear directly revenues from real estate share on the tax return N ° 2042 (excludes shares of SCPI opening right to the title of the depreciation deduction provided for in article 31 bis of the CGI).
Note: the SCPI may, if all the members agree, not to distribute the entire profit of the current year for maintenance. It then meets the partner to declare the profit earned by the SCPI year and not distributed to the unitholder.
The real plan
When to use the real plan?
You don't have the choice if your land income is greater than €15,000 per year. On the other hand, you have the option to opt for this scheme even if your land income is below € 15,000 per year instead of the plan micro-foncier (CGI, art. (32 – 4). The option is then exercised an irrevocable for a period of three years.
The investor may have to opt for a real plan when he bought his shares of REITs to credit and interest that the amount of the loan interest is higher than the applied reduction of 30% in the micro-foncier regime. So going out calculators.
The management company of the SCPI does ask each year the amount of net income to be reported on the special form N ° 2044. All charges and management fees are deducted in advance by the management company. You may be faced with two options: a profit (income property) or loss (land deficit).
The benefit is subject to social contributions of 15.5% and then taxed at your marginal of tax bracket height (in which case your property income are from only the SCPI)
In the case of a loss, resulting from deductible expenses from income other than interest on loans but land, it can be deducted from the overall income of the partner within a limit of €10,700. Beyond this limit, the upper portion of the deficit be carried forward on the land revenue of the next 10 years.
In case of purchase of the shares of REITs to credit, the amount of the loan interest is not factored into the property income of the SCPI to the needs of the tax return. Indeed, the management company does not manage loans of its unitholders. These interests are deductible by the taxpayer of land revenues and so come to reduce the imposition of these income said. However, interest on loans may contribute to the formation of a deficit that is due on the total income and are only carried on land revenues in the next 10 years.
Taxes on financial income
A minor approach in taxation of the SCPI
Bearer shares of the SCPI partner may be asked to pay the tax on the financial products of the investments of the SCPI. Generally, the financial income distributed to the partners are weak.
The income is subject to taxation on the income scale after application of social contributions in force.
Taxation on capital gains
Capital gains on sales of real estate
On the sale by the SCPI of a building that it has less than 22 years (30 years for social security payments), eventually the gains is taxable. The SCPI is fiscally transparent, unitholders are therefore liable for capital gains tax.
With regard to individuals holding shares in their private assets, the tax is levied directly by the notary and the management company of the SCPI. The partners have no regulation to perform.
For holders subject to business profits (BIC, BA or BNC) or the corporate income tax regimes, the situation is different. They should include in their statement of result the share of added value that is paid to them.
Upon resale of the shares of REITs, the capital gain is the difference between the sum from the proceeds of the sale and the purchase price of the shares. As for the taxation of the property held live, consider the progressive reduction which will apply as follows:
- 6% rebate from the 6th to the 21st year
- 4% gradient between the 22nd year
Regarding the social levy exemption takes place from 30 years of detention. Before that date, unitholders receive the following discount:
- 1.65% abatement from the 6th to the 21st year
- 1.6% gradient between the 22nd year
- 9% gradient between 23rd and 30th year
The value added tax rate is 19% and 15.5% for social security payments. The amount of the value added tax is zero beyond 30 years of detention.
We can increasingly benefit from an exceptional reduction of 25% on disposals made between September 1, 2013 and 31 August 2014. It applies, after taking into account of the abatement for duration of detention, in assignments between 1 September 2013 and 31 August 2014.
This allowance is applicable both to the income tax and social contributions from real estate gains. It will be also applied to the surtax on high gains.
The Government has added via the Finance Act amendment for 2012, a surcharge depending on the amount of capital gains. This surcharge is applicable to capital gains real estate until 31/12/2015 and is implemented from an amount of capital gains real estate superior to 50 €000:
|Taxable value||Amount of the surcharge|
|From € 50.001 to € 60,000||2% PV – (€60,000 – PV) x 1/20|
|From 60.001 to €100.000||2% PV|
|From 100.001 to € 110,000||3% PV – (€110,000 – PV) × 1/10|
|From € 110.001 to € 150,000||3% PV|
|From € 150.001 to € 160,000||4% PV – (€160,000 – PV) × 15/100|
|From € 160.001 to € 200,000||4% PV|
|From 200.001 to € 210,000||5% PV – (€210.000 – PV) × 20/100|
|From € 210 001 to € 250,000||5% PV|
|From € 250.001 to € 260,000||6% PV – (€260,000 – PV) × 25/100|
|More than €260.000||6% PV|
(PV = amount of the taxable capital gain)
Other important points in the calculation of the capital gain:
- Less than €15,000 assignments of shares of REITs are subject to tax unlike sales held live property. It goes same for exemptions for some holders of old age or invalidity pension.
- Acquisition costs are taken into account for their amount real
- For partners submitted to the pension business profits (BIC, BA, BNC or IS), gains are offset with potential and taxable losses according to the system of professional capital gains. (if the transfer takes place within 2 years, the added value known as short term is imposed on the IR at progressive rates.) If the transfer takes place after 2 years, so-called value long term is imposed on 34.5%)
Example of the calculation of the tax on the added value of assignment
|Sale price of the shares as of February 19, 2012||€50,000|
|On 18 February 2004 acquisition price||€30.000|
|Acquisition cost of the shares (11%)||€3.300|
|Added value before deduction||€16,700|
|Total reduction of 6% between the 6th and the 8th year||€3.006|
|Net taxable capital gain in income tax||€10.270|
|Total reduction of 1.65 per cent between the 6th and the 8th year||€827|
|Net taxable capital gain to social contributions||€11.905|
|Taxation in the income tax||€1,951|
|Taxation to social contributions||€1,845|
|Amount of tax payable on the added value||€3.796|
The tax administration on the SCPI reference text: