SCI and UK Mortgage as an expense?

[IanB]

We are buying a ski chalet with another couple and had planned to form an SCI. However we are planning a UK mortgage on our home rather than a french mortgage. I know french mortgages ar treated as an expense against rental income with an SCI. However my accountant here thought that a UK mortgage may not be offset as an expense against rental income as we were loaning the money to a company.

Has anyone been in a similar situation and got any advice on this from their accountants?

Thanks, IanB

[Chiefluvvie]

Hi Ian - I do have experience of this.

You can only offset expenses incurred on the properties held within your SCI portfolio - quite obviously your UK property would not fall into this category. So - your accountant is correct but for the wrong reason.

Are you absolutely sure forming an SCI is the best way for you to go? They can be very complex structures with comprehensive annual returns required and income can be subject to French income tax, corporation tax and social charges for starters! When and if you come to dissolve your SCI - the charges are huge.

I would strongly advise you to seek professional advice from a French based accountant familiar with SCI's.

Chiefluvvie

[Wilko]

CL would you care expand on :

When and if you come to dissolve your SCI - the charges are huge.

Thanks

W

[Chiefluvvie]

Sure - on top of any notary fees, compulsory newspaper ads etc - there is a dissolution tax which is calculated as a percentage of the current value of any property/ies in your SCI portfolio - less deductions for any significant work / costs associated with them. Hang on to those receipts!!

Your notaire will advise.

Chiefluvvie

[Wilko]

CL Thanks for that.

W