On June 30, 2021, South Africans will be able to say goodbye to the Section 12J tax incentive.
It might not mean much to you, but there’s a reason so many savvy investors are so sad to see the tax break disappear.
Once interested, the entire signup process can be completed in 24 hours, so it’s really not too late to get involved before the window of opportunity is permanently closed.
Described by Neill Hobbs of the Section 12J specialist firm, Anuva Investment, as “hands down the best tax-saving opportunity imaginable,” the Section 12J incentive was introduced by SARS and the Treasury in 2009, as a means of stimulate investment in small and medium-sized enterprises. businesses and thereby stimulate the economy and improve job creation.
Initially, it received little attention and was seen as something for the wealthy and out of reach for your average investor.
However, as pundits have started to realize the nature and merits of the opportunity, so have smart portfolio and investment managers, and over the past eight years the industry has been doing so. section 12J has developed attractive investment products.
With time running out and just under two weeks left, many Section 12J funds are doing everything they can to attract investors, and the rush for last minute deals could lead to an ‘anything goes’ scenario. As fund managers. bustle for attractive options.
Ryan Flowers, fund manager in Cape Town Flyt Real Estate Investment, warns that investors should use caution when looking for 12J investments and ensure that they have confidence in the fund manager and that they are happy with their underlying investment.
The company sold its initial section 12J hotel investment options until the 2021 tax season deadline, and has since received considerable interest in its ancillary tranche of ownership through 12J in Cape Town. . A Thibault and Upper East Side Hotel Apartments in the Woodstock area (below).
Flowers explains that the popularity of their offering was in large part due to the financing facility offered through their Flyt Select and partnership funds of Rand 240 million and Rand 190 million, which provide investors with the funds to invest. from the start (before the June 30 deadline) while they were waiting for their tax refund:
“The problem with any Section 12J investment is that you need the money to invest in order to receive the tax certificate and then the tax refund.
“The Flyt Select and Partnership funds aim to ensure that investors don’t miss out on the final Section 12J tax refund, with a simple 5% deposit (Flyt provides bridging funding for the balance) while they await their tax refund. return, which is then invested in the unit or project of their choice, settling part of the bridging funding. The balance of the bridge financing is then settled either by a mortgage loan or in cash (Flyt Select), or by a long-term loan from Flyt (Partnership).
According to the company, the Partnership Fund has so far saved investors R60 million in taxes that have been used to acquire hotel properties.
Subscriptions to the 2022 Partnership Fund will be capped at R300 million, and investors can contribute through their allocation of R2.5 million for individuals or the corporate allocation of R5 million.
To find out more about the developments and financing of Flyt Property Investment, head here.