The approval clause for partners in a civil real estate company (SCI) reduces the value of the shares for wealth tax (IFI) since it creates a difficulty for the sale of these shares. This clause, which appears in the statutes of the SCI, limits the transferability of the shares, notes the Court of Cassation.
The value of a property, on which the amount of real estate wealth tax (IFI) is fixed, is, as with the old version of wealth tax (ISF), the price that could be obtained on a real market, taking into account its state of fact and law, reminded the Court. From then on, any obstacles or legal difficulties limiting the possibility of selling, i.e. the liquidity of the propertylimits its value.
A couple contested the wealth tax adjustment that had been applied to them on their SCI shares. The couple is in joint ownership of this property but there is no taking this joint ownership into account since it holds all of the shares, argued the tax administration. This joint ownership therefore does not limit the liquidity of the property.
However, the judges observed, the statutes of the SCI provided that any new partner, any candidate for the acquisition of shares, should be first approved by others, which amounted to limiting the possible buyers and therefore the transferability of the property, and consequently the market value of the shares. It would take not only the approval of other owners to sell but also a buyer ready to commit despite this situation. From then on, an abatement is justified on the taxable value.
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The shares held by an associate of SCI, such as the rights to joint ownership, have a lower value than the fraction they represent of the total value of the building, the Court recalled.
However, in March 2019, the Court ruled that certain joint ownerships do not affect the value of a property, such as inheritance or matrimonial joint ownerships, which bring together relatives with a common interest.
Cas. Com, 15.2.2023, F 20-19.451
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