SCPIs have been on the rise for several years. But when it comes to declaring their income to the tax authorities, many taxpayers are hesitant about what to do. Spotlight on the taxation of stone-paper.
It is one of the rising stars of savings in France. In 2021, civil real estate investment companies (SCPI) recorded a collection of 7.4 billion euros. That is 20% more than the previous year, according to estimates by the French Association of Real Estate Investment Companies (ASPIM) and the Institute for Real Estate and Land Savings (IEIF).
It must be said that with an entry ticket sometimes accessible from a few hundred euros, and an average return of 4.5% (net of fees) in 2021, SCPIs have no shortage of arguments to convince investors. But be careful not to make mistakes that could cost you dearly when declaring your earnings to the tax authorities.
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Micro-property: 30% flat-rate allowance
Have you invested in stone-paper? In the eyes of the tax authorities, the majority of the dividends paid to you by SCPIs fall into the category of property income. In other words, your earnings are for the most part subject to the progressive scale of income tax and social security contributions.
When completing your declaration, you have the choice between two tax regimes: the real regime, and the micro-property regime. In 9 out of 10 cases, eligible taxpayers opt for micro-property. They thus benefit from a fixed reduction of 30% on gross income, explains Stphane van Huffel, co-founder of Netinvestment. This considerably simplifies their administrative procedures.
However, the micro-land regime is not accessible to everyone. To be eligible, your annual property income must not exceed 15000 euros in total, and part of this income must come from directly held real estate. If you opt for this regime, indicate the total amount of your micro-property income in the box 4BE form 2042. No need to deduct the 30% allowance, the tax authorities calculate it for you.
Taxation of property income: what taxes in 2022?
Real regime: profitable if your expenses are high
However, micro-property is not systematically the most interesting tax system. If you buy SCPI credit shares, for example, there is a good chance that the amount of charges associated with your investment will be greater than 30% of gross rents. In which case, it is better to opt for the real plan.
Micro-property is especially suitable for investors who buy SCPI shares in cash, confirms Stphane van Huffel. In contrast, the real regime allows you to deduct all of the charges relating to your investment, such as management fees, or the interest on your loan, for example.
To simplify reporting procedures, management companies send their shareholders a Single tax printout (IFU). They specify the exact amount of gross income and deductible expenses. If you have purchased credit SCPI units, your bank will also send you the annual statement of your borrowing interests. From this information, you can calculate your net property income and indicate the result obtained in the box 114 of form 2044.
If your net property income is greater than zero, then simply report this amount on the line 4BA of form 2042. However, it happens that after deduction of expenses, your net property income ends up in the red. In this case, you can deduct from your income up to 10700 euros per year. And if the land deficit is higher than this ceiling, the excess can be carried over to income for the next 10 years, recalls Stephane van Huffel.
Land deficit: what can be deducted from your income
How to declare your earnings abroad?
More and more SCPI managers are investing beyond French borders. An openness to the world which translates into more advantageous taxation for French savers. On the one hand, international income escapes social security contributions, emphasizes Stephane van Huffel. On the other hand, the applicable tax is that of the country where the real estate is located, and not that of the place of residence of the subscriber. For example, rents from a building located in Berlin will be subject to German taxation. Even if this property is held by a French SCPI.
To prevent taxpayers from being subjected to double taxationin the foreign country and then in France, the Member States of the European Union have signed tax treaties. In detail, two devices have been planned. In Germany, Spain or the United Kingdom, for example, the taxpayer is taxable in France and in the country where the property is located. But he benefits in return from a tax credit which more or less neutralizes French taxation. In other countries, such as Belgium, Portugal and the Netherlands, your earnings are only taxed abroad. However, this income is taken into account to determine your tax rate.
Rental investment: are SCPI fees really too high?
How to declare your financial income?
When you buy SCPI shares, the management company strives to invest your money as quickly as possible by acquiring new real estate. However, it happens that, for lack of interesting opportunities, several weeks pass before the manager buys a property. The management company can then decide to place its cash on secure media. The financial income thus generated must also be declared to the Public Treasury, via form 2042.
The applicable tax is the same as for property income. It is therefore the progressive scale of income tax that prevails. However, since 2018, you can, under certain conditions, opt for the single flat-rate levy (PFU), either 12.8% tax and 17.2% of social contributions, specifies Stephane van Huffel.
Savings: what the flat tax costs the State
How to declare your capital gains?
Finally, in the event of a capital gain on the resale of your SCPI shares, your gains are subject to income tax (19%), as well as social security contributions (17.2%). That is a total tax of 36.2%.
However, partners benefit from tax relief, the amount of which varies according to the period of detention. The amount of these allowances is not the same for income tax as for social contributions. It should be noted that the higher capital gains 50000 euros are subject to a specific tax since January 1, 2013.
| Holding period of SCPI shares | Amount of income tax deduction | Amount of the allowance for social contributions |
|---|---|---|
| 0 – 5 years old | 0% | 0% |
| 6 – 21 years old | 6% | 1.65% |
| 22 years old | 4% | 1.60% |
| 22 – 30 years old | Exemption | 9% |
| Over 30 years | Exemption | Exemption |
Result: if you have held your SCPI shares for more than 22 years old, your capital gains are no longer subject to income tax. To also be exempt from social security contributions, you have to wait 30 years.
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