What is the tax treatment for SCPIs?

The research firm Rock-n-Data has published a report on the taxation of income from real estate investment trusts (SCPI).

This initiative is particularly useful for yield-focused SCPIs, which largely dominate the SCPI market and whose tax treatment can be complex.
If you have purchased shares in a yield-focused SCPI, you are taxed at two levels. First, the income generated by the real estate fund—corresponding to rent distributed on a pro-rata basis according to your shareholding and net of management fees—is considered real estate income. It is therefore added to the rent you receive if you own a rental property. This real estate income is subject to the progressive income tax (IR) schedule, based on your marginal tax rate (TMI). However, if your real estate income (including that from your SCPI shares) is less than 15,000 euros per year, it qualifies for the “micro-foncier” tax regime, with a 30% deduction automatically applied by the tax authorities.
 

SCPIs also generate investment income, a portion of which you receive. Since this type of income is considered an investment, it is subject to the same tax treatment: gains are subject to the 30% flat-rate withholding tax (PFU) or, if you prefer, the progressive income tax scale. If you choose the latter option, it will apply to all of your investments.
 

Another aspect of SCPI taxation concerns capital gains on the sale of property

If you sell your shares for more than you paid for them, the gain from the sale is taxed at 19%. This capital gains tax rate varies depending on the length of time you’ve held the shares. If you acquired the SCPI shares at least six years ago, a 6% deduction applies for each year of ownership. As a result, you will no longer owe any tax on the capital gain after holding the shares for 22 years. Furthermore, if your capital gain exceeds 50,000 euros after applying the holding-period deduction, the portion of the gain exceeding that amount will be subject to the tax on high real estate capital gains. The rate for this tax increases in increments of 10,000 to 40,000 euros. Thus, the tax is 2% for the 50,001 to 60,000 euro bracket, rising to 6% for the 260,000 euro bracket and above.
 

Finally, it is important to remember the real estate wealth tax (IFI). SCPIs are considered taxable assets for IFI purposes. This tax, which replaced the solidarity tax on wealth (ISF) in 2018, applies to real estate assets with an estimated value exceeding 1.3 million euros. Its rate varies, according to a tiered scale, from 0.5% to 1.5%. The value per SCPI share to be reported for IFI purposes is provided annually by the management company in the summary of real estate and investment income. You then simply multiply this value by the number of shares held to obtain the amount to be reported for real estate wealth tax purposes.