You have owned a Paris flat for thirty years. It is now worth more than €600,000, the mortgage is long gone, and you need cash. Selling to a third party means losing the asset; keeping it leaves you wealthy on paper and short of liquidity. The real estate owner buy-out (OBO) offers a third way: you sell the property to an SCI (société civile immobilière — a French non-trading property company) that you control, the bank finances the purchase, you cash in the price, and the rent repays the debt.
The structure is perfectly legal and routinely used by French wealth managers. It is also expensive up front, closely watched by the tax authorities, and surrounded by false claims — starting with a supposed "capital gains deferral" that simply does not exist for real estate.
Selling to yourself costs 8% to 10% of the price in entry costs: up to 6.32% in transfer duties in 2026 in the 83 departments that voted the increase, plus the notary's fees, the property-security contribution, the loan guarantee and bank arrangement fees.
What this article covers
This article describes the real estate owner buy-out as practised in France in 2026: the legal framework (capital gains, transfer duties, depreciation under corporate tax, abuse of law, wealth tax), the friction cost line by line, a worked case on a Paris flat, the comparison with an equity-release mortgage, and the mistakes to avoid.
Real estate owner buy-out: what French law says in 2026
An OBO is not a tax regime: it is a structure built on ordinary rules, and the 2026 Finance Act (Act No. 2026-103 of 19 February 2026) created none of its own. The transaction is an ordinary sale: a transfer for valuable consideration, a deed executed before a notary, land registration, transfer duties. The fact that the seller controls the buying company changes neither the legal nature of the deed nor its taxation.
The most underestimated consequence is the simplest one: the seller realises a taxable capital gain. Article 150 U of the CGI applies without any neutralisation — 19% income tax plus 17.2% social charges, subject to the holding-period allowances. The rules on calculating real estate capital gains in 2026 apply in full to an OBO.
| Rule applying to an OBO | Content | Legal reference |
|---|---|---|
| Seller's capital gain | 19% income tax + 17.2% social charges; income tax exemption after 22 years of ownership, social charges after 30 years | Art. 150 U of the CGI |
| Surtax on large gains | 2% to 6% above €50,000 of net taxable gain | Art. 1609 nonies G of the CGI |
| Main residence | Full exemption if the property is the main residence on the date of sale, with no minimum occupancy period | Art. 150 U, II-1° of the CGI |
| Transfer duties | Departmental share raised from 4.50% to 5.00% for deeds signed between 1 April 2025 and 31 March 2028; 6.32% in total in 83 departments | Art. 116, Act No. 2025-127 of 14 February 2025 |
| Depreciation in an SCI under corporate tax | The building is booked at its purchase price and depreciated component by component; land is not depreciable | Art. 39, 1-2° of the CGI; BOI-BIC-AMT |
| Abuse of law | Sham deeds or deeds with an exclusively tax purpose (L. 64); deeds with a mainly tax purpose since 1 January 2020 (L. 64 A) | Art. L. 64 and L. 64 A of the LPF (French Tax Procedure Code) |
| Real Estate Wealth Tax (IFI) | SCI shares are taxable up to their real estate fraction; debt taken on to buy an asset from the taxpayer is not deducted | Art. 965 and 973, II of the CGI |
Two current points are worth stating. The 2026 Finance Act did not change the capital gains regime for individuals: neither the exemption cut to 17 years nor inflation indexation of the acquisition price was voted through, and the 22-year and 30-year periods remain in force (ANIL legal analysis). The proposed "tax on unproductive wealth" was dropped from the final text: the standard IFI applies in full in 2026.
That leaves article 150-0 B ter of the CGI, which appears in almost every piece written about the OBO. It creates a deferral for the contribution of securities to a holding company under corporate tax controlled by the contributor: neither the sale nor the contribution of a building.
How a real estate owner buy-out works, step by step
The OBO rests on a simple idea: turning a frozen asset into cash without selling it to a third party, by inserting a company you control and having that company, rather than you, carry the debt.
The four stages of the transaction
Stage one is setting up the buying company: usually an SCI opting for corporate tax, held by the owner, sometimes with the children from the outset. It is the corporate tax election that unlocks depreciation of the building: the choice between an SCI under corporate tax and an SCI under income tax shapes the whole structure.
Stage two is the sale before a notary, at the property's market value: the price must match the market, a classic point of scrutiny for the tax authorities. Stage three is the financing: the bank lends to the company, which pays the price to the seller — that is the cash-out. Stage four runs for the life of the loan: the SCI lets the property and applies the rent to the monthly instalment.
The friction cost: what the transaction takes up front
An OBO makes the SCI bear the full costs of an ordinary purchase. Transfer duties (DMTO — droits de mutation à titre onéreux) account for most of it: the departmental share (5.00% since the increase allowed by article 116 of Act No. 2025-127 of 14 February 2025), the 1.20% municipal tax and the State's assessment levy equal to 2.37% of the departmental duty — that is 6.32% of the price in the 83 departments that voted the increase, against 5.81% elsewhere. The first-time-buyer exemption is irrelevant here: the buyer is a company.
On top come the notary's fees, set by a degressive national scale (order of 25 February 2026, NOR ECOC2604872A, in force from 1 March 2026 to 29 February 2028): 3.870% up to €6,500, 1.596% from €6,500 to €17,000, 1.064% from €17,000 to €60,000, then 0.799% above, plus 20% VAT. The property-security contribution comes to 0.10% of the price, and the loan brings its own costs: a guarantee — mortgage or lender's lien — of 1% to 1.5% of the amount borrowed, plus arrangement fees. The reduced 2% to 3% figure often quoted applies to new-builds.
Order of magnitude to remember: roughly 7.5% to 8.5% of the price in acquisition costs, plus 1% to 1.5% in guarantee and arrangement fees on the amount borrowed. An OBO therefore costs between 8% and 10% of the price, paid in cash on the day of signing.
The depreciation step-up: the real lever, and its flip side
The only robust tax benefit of an OBO lies in resetting the depreciable base. An SCI under corporate tax books the building on its balance sheet at its purchase price — the value on the day of the sale, not the historical price paid decades earlier — then depreciates it component by component (art. 39, 1-2° of the CGI; BOI-BIC-AMT). Land is never depreciable and must be split out.
The effect is mechanical: when the property is held directly and taxed as property income, no depreciation is deductible. After the OBO, the depreciation charge reduces the company's taxable profit, often to the point of wiping it out for several years. It is this step-up that explains the appeal of the structure, far more than the cash-out itself.
The flip side must be stated just as plainly. When the SCI resells, the professional capital gain is computed on the net book value: the depreciation already claimed is added back into the taxable gain under corporate tax. The step-up does not remove the tax, it defers it. Second constraint: taking cash out as dividends triggers the flat tax, raised to 31.4% (12.8% income tax and 18.6% social charges) for payments made since 1 January 2026.
Then comes the estate-planning benefit, often the decisive one: once the property sits inside a company, it is transferred as shares, gifted in successive tranches within the €100,000 allowance per parent and per child (art. 779 of the CGI), renewable every fifteen years (art. 784 of the CGI), and possibly as bare ownership using the tax scale for usufruct in article 669 of the CGI. A building cannot be gifted in tranches.
Worked case: a 65 m² Paris flat sold to your own SCI for €620,000
You have owned a 65 m² Paris flat since 1994, with no outstanding loan. At €9,580 per m² — the median price for existing Paris flats at the end of February 2026 according to the Notaires du Grand Paris — it is worth around €620,000. You set up an SCI under corporate tax with your two children and sell it the property at that price. The bank grants €520,000 over 20 years at 3.45% (the Crédit Logement/CSA Observatory reports a 3.26% average rate in June 2026, with a small premium for a wealth-holding SCI), i.e. about €3,000 a month excluding insurance.
Scenario — Sale to your own SCI under corporate tax, in a department that voted the duty increase
| Line item | Calculation detail | Amount |
|---|---|---|
| Sale price to the SCI | 65 m² at the Paris market price, rounded | €620,000 |
| Transfer duties | 6.32% × €620,000 | €39,184 |
| Notary's fees (excl. VAT) | Degressive scale | €5,351 |
| VAT on the fees | 20% × €5,351 | €1,070 |
| Property-security contribution | 0.10% × €620,000 | €620 |
| Disbursements and formalities | Estimated flat amount | €1,200 |
| Loan guarantee and arrangement fees | ≈ 1.25% of €520,000 | €6,500 |
| Total costs borne by the SCI | — | €53,925 |
| As a share of the price | €53,925 / €620,000 | ≈ 8.7% |
On the seller's side, ownership since 1994 exceeds 30 years: the gain is fully exempt from income tax (22 years) and from social charges (30 years), and the surtax under article 1609 nonies G of the CGI does not apply. On a property held for twelve years, the gain would be partly taxable at 19% and 17.2%, plus the surtax where applicable: total friction would then exceed 10% of the price.
But the cash-out is not €620,000. Since the bank only finances €520,000, the SCI must find €100,000 to complete the price and €53,925 for the costs: in practice the seller puts them back in, as equity or as a shareholder's current account. The cash actually released therefore comes to about €466,000, i.e. 75% of the value of the property.
| Tax effect inside the SCI | Detail | Amount |
|---|---|---|
| Value booked on the balance sheet | Price paid on the day of the sale | €620,000 |
| Land share, not depreciable | Assumed split of 20% | €124,000 |
| Depreciable base (building and components) | €620,000 − €124,000 | €496,000 |
| Annual depreciation charge | Illustration over 40 years, to be adjusted per component | €12,400 |
| Depreciable base before the OBO | Direct ownership taxed as property income | €0 |
The last line sums up the point: under direct ownership the depreciable base is nil; after the OBO it restarts from market value. One constraint remains, and it bites in Paris: a market rent rarely covers a €3,000 monthly instalment.
OBO or equity-release mortgage: comparing the entry cost
Is the need cash, or an estate-planning restructuring? If the aim is simply to release cash, an equity-release mortgage — a loan secured on the property, which you keep — achieves the same result far more cheaply: roughly 1.5% to 2% in guarantee and arrangement fees, no transfer duties, no capital gain triggered.
| Option | Indicative entry cost | Capital gain triggered | Ownership of the property |
|---|---|---|---|
| Real estate OBO (sale to your own SCI) | 8% to 10% of the price | Yes (art. 150 U of the CGI) | Transferred to the company |
| Equity-release mortgage | 1.5% to 2% of the amount borrowed | No | Kept directly |
| Sale to a third party | Costs borne by the buyer | Yes (art. 150 U of the CGI) | Lost |
An OBO is therefore only justified if you are after something beyond cash: a fresh depreciable base, a corporate structure that makes gradual transfers by share possible, or bringing your children into the capital from day one.
The four mistakes that sink a real estate owner buy-out
Mistake No. 1 — Believing in a "capital gains deferral"
This is the most widespread and the most expensive mistake. Article 150-0 B ter of the CGI creates a deferral for the contribution of securities to a holding company under corporate tax controlled by the contributor. It covers neither the sale nor the contribution of a building: the gain falls under article 150 U of the CGI and is payable immediately. The 2026 Finance Act even tightened the scheme — minimum reinvestment raised from 60% to 70% where the securities are sold within three years, and residential or wealth-holding real estate excluded from eligible reinvestments, for transactions carried out since the Act was promulgated.
Mistake No. 2 — Keeping the use of the property after selling it
Selling your main residence to your own SCI is legal: the exemption in article 150 U, II-1° of the CGI applies if the property is your main residence on the date of the sale. But staying on as a tenant of your own company is the most exposed pattern. The Conseil d'État held that selling a villa to one's own SCI and renting it back was an abuse of law, a circumvention of article 15, II of the CGI designed to create artificial property income deficits (Conseil d'État, 8 February 2019, No. 407641). If the company is under corporate tax, an undervalued rent granted to the shareholder also risks recharacterisation as distributed income (art. 111, c of the CGI).
What to check before signing: a genuine amortising bank loan, a price in line with market value, a market rent actually paid, real accounts and real corporate life, and a demonstrable non-tax estate-planning purpose. These criteria come from French tax doctrine and from the opinions of the Abuse of Law Committee (Comité de l'abus de droit fiscal).
⚠️ Warning: the idea that a "small estate-planning motive" is enough to put the transaction beyond reach is out of date. Article L. 64 A of the LPF, introduced by article 109 of Act No. 2018-1317 of 28 December 2018, targets deeds with a mainly tax purpose — no longer only an exclusively tax purpose as in article L. 64 — carried out since 1 January 2020, for adjustments notified since 1 January 2021.
Mistake No. 3 — Counting on the SCI's debt to wipe out the wealth tax
SCI shares remain subject to the Real Estate Wealth Tax (IFI) up to their real estate fraction (art. 965 of the CGI): an OBO takes nothing out of the tax base. More importantly, article 973, II of the CGI expressly targets this structure: when valuing the shares, no deduction is allowed for debts taken on, directly or indirectly, by the company to buy a taxable asset from the taxpayer or their household. Debt from a sale to yourself is neutralised, save for the safeguard clause — proof that the loan does not pursue a mainly tax purpose, which covers a genuine amortising bank loan funding a real liquidity need (BOI-PAT-IFI-20-30-30, version of 5 June 2024). Article 974 of the CGI imposes mirror restrictions on directly held assets. Re-run the 2026 IFI calculation with and without the structure.
Mistake No. 4 — Overestimating the SCI's borrowing capacity
No regulation sets the lending conditions for a wealth-holding SCI: the recommendations of the French High Council for Financial Stability (35% debt-service ratio, 25-year term) target loans to individuals and do not automatically bind these companies. In practice, banks rarely finance 100% of the price including costs, expect a meaningful down payment, check that the rent covers the instalment, and often require personal guarantees from the shareholders.
Cost out your OBO before booking the notary
Mon Simulateur Immobilier owner buy-out simulator
Cost out the whole transaction: the sale price to your SCI, transfer duties at your department's rate, the notary's fees on the degressive scale, the guarantee and arrangement fees, the loan amount and instalment, the cash actually released after reinvestment, and the depreciable base created inside the company.
To go further: the property holding company simulator to arbitrate the ownership structure, and the capital gains calculator to cost the tax due by the seller.
Conclusion
The real estate owner buy-out works, but not for the reasons usually given. It grants no capital gains deferral, it does not take your wealth out of the IFI base, and it costs 8% to 10% of the price on the day of signing. Its real value rests on three things: immediate liquidity, a depreciable base rebuilt at market value, and a structure that makes gradual transfers possible — worth weighing against the cost of inheritance tax on a French property held directly.
The decision is made on figures. The Mon Simulateur Immobilier owner buy-out simulator computes the full entry cost, the cash actually released after reinvestment in the company and the depreciable base created, so you can compare the transaction with a plain equity-release mortgage. Then have the scheme validated by a notary and a tax lawyer.
