An SCI can be created and implemented as a housing wealth management tool. Indeed, an SCI is a company, so a corporation with its own legal existence. As such, it has a corporate purpose determined by the partners in relation to real estate.
1. After the sale of the property what to do of company ?
Like any other company, an SCI is limited in its duration, it can not exceed 99 years. This period, however, is long enough to allow the company achieve its purpose stated in the statutes. Once it realized, the company has no interest in continuing. This is particularly the case in the sale of property held by the company.
– Partners can sell all units to group among the hands of a single owner, who could then dissolve the SCI. But the first obstacle to be overcome by the seller, will be to find a buyer, the transferee. It will also hold in some cases the approval of associates.
– They can also decide that the SCI sells the property and divide the sales price in proportion to the number of shares held.
Subsequently, in this case, the tax on the capital gain is determined at the SCI but the corresponding capital gains remain taxable at the level of each partner. After a general meeting, the shareholders resolve to dissolve the SCI, its purpose ceased to exist. The debts are repaid, the bank balance is distributed among the partners in proportion to their shares, the SCI accounts are closed.
Dissolution may be legal, for example during recovery problem by creditors.
2. The dissolution as a solution to conflict between partners
Article 1844-7 of the Civil Code provides that the company shall end on the judicial dissolution by the court at the request of a partner with good reason, especially in case of non-performance by a partner or disagreement between associates paralyzing the functioning of company. After convening the partners at a special extraordinary general meeting, they will appoint a liquidator (who may be the manager). In case of disagreement, a judge may intervene in the choice of the liquidator. After the general meeting, a report will be prepared. The liquidator must then save it to the home of the tax office of one of the partners.
Then, the liquidator will proceed to:
• The publication of the dissolution in a legal gazette. This allows to inform creditors of the SCI on its dissolution, to enable them to assert their rights.
• The filing of the minutes (in duplicate) in the Registry of the Commercial Court by the liquidator
Once the SCI dissolved, the liquidator will have to liquidate by selling assets to repay creditors.
When all the assets of the company have been wound up, the liquidator will proceed with the publication of the liquidation in the legal gazette
Then proceed with the delisting of the SCI at Register of Commerce and Companies.
Once the SCI is removed from the RCS, it loses its legal personality and no longer exists. Any remaining property after the SCI has been liquidated, will be jointly owned by the SCI. Of course, the dissolution of an SCI does not remove the associated tax effect. They will have to submit:
• The imposition of capital gains realized on the sale of property. The partners pay this tax in proportion to their interest in the property.
• The imposition on the outcome of SCI on the year of dissolution.
NB: For the buildings acquired by SCI associated with the income tax, this one can recover his property without paying taxes (Theory of Conditional mutation inputs)