WORDS AND PHOTOS: SUPPLIED
Are the chips down? Think again. Cape-based Flyt Property Investment recently launched an inventive way for South Africans to take advantage of government’s Section 12J tax incentive.
Flyt Partnership Fund, which is restricted to R300m, allows investors to take part in the fund on a 100% loan basis. The R300m has been made available as loan capital to allow investors to participate as partners in the fund. Although a minimum investment of R1m is required, an investor needs only contribute 35% (in other words, R350,000 per R1m), as Flyt Property Investment will cover the remaining 65% on the investor’s behalf.
In essence, investors can make a R1m Section 12J investment by putting down only R350,000, which will be returned to them via their Sars tax refund (subject to their own tax rate).
The company has also incorporated a bridging loan facility for qualifying investors who would like to borrow the 35% portion while waiting for their Sars refund.
Flyt Property Investment MD Zane De Decker compares SA to a global tax haven, describing the opportunity as a fantastic way to get your tax back via government’s Section 12J incentive and invest it in property.
When his team tested the market with their partnership product in February 2020, R24m was raised via word of mouth within a few days, with investors showing huge interest. “We increased our capacity to provide funding for this product and expect a keen uptake before the Sars Section12 J cut-off in July 2021,” he says.
Section 12J investments have caught the eye of many South African investors and government has had to do an about-turn by limiting the amount permitted to be invested to R2.5m per annum.
Section 12J of the Income Tax Act was introduced in 2009 to encourage taxpayers to invest in local companies and receive a 100% tax deduction of the value of their investment.
The investor receives a share certificate together with a tax certificate, allowing the invested amount to be deducted from their taxable income in the year that the investment is made. To date, South Africans have invested an estimated R10bn in the Section 12J sector.
Flyt Partnership Fund, which is managed by Section 12J specialist investment firm Anuva Investments, holds assets in aparthotel developments in Diep River, Rosebank, the Foreshore and the Cape Town CBD.
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