The company’s recently launched Blended Partnership Fund, which combines ownership in two hospitality property developments, reached its planned R50million subscription cap within a matter of days, resulting in the release of a further 50 shares. The popularity of the fund can largely be attributed to the 100% loan facility that has been made available to investors and taxpayers who do not have the finance upfront.

Investment into Section 12J sector has recently seen significant uptake, what with the looming tax deadline and investors waking up to the incentive as it nears its cut-off date. Flyt’s Section 12J compliant property development funds provide investors with the 100% tax deduction into three managed property developments: WINK Aparthotel on Cape Town’s Foreshore which is 100% subscribed, Quivertree student accommodation in Stellenbosch, and Eaton Square in Diep River.

The Blended Partnership Fund combines investment into Quivertree and Eaton Square via investment into the fund via shares. In partnership with specialist Section 12J managers, Anuva Investments, 50 shares have been made available at R1million each.

“The Flyt Partnership Fund is a low-risk, high reward investment and after the incredible uptake of our WINK and Eaton Partnership Fund of 2020, we are pleased to offer our investors the exposure to student accommodation and aparthotel markets, both offering strong rental markets and great capital gains,” says Flyt’s Fund Manager Ryan Flowers. “We’ve also been inundated with investors wanting to make use of the loan facility, which essentially allows tax-compliant investors to take part in the fund on a 100% loan basis. R300 million has been made available as loan capital to investors to participate as partners in the fund.”

The numbers:

Of the R1million required, Flyt Property Investment will contribute 65% on the investor’s behalf in partnership, leaving R350 000(35%) required from the investor. A 5% deposit is required to secure the investment; however, qualifying taxpayers can request a 100% loan for the 35%

In essence, investors can make a R1 million Section 12J investment by putting down only R350 000, which will be returned to individuals via their SARS tax refund (subject to investor’s 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 the SARS refund.

Below is an example of how someone earning R3 million a year can, through the tax incentive and via the Partnership Fund make a property investment of R2.5 million, by committing a R125 000 deposit before 28 February. 

James Rothmann, CFO of Anuva Investments, describes the opportunity as “a fantastic way to get your tax back via Government’s 12J incentive and invest it into property.” Rothmann reports that the investment team “has increased our capacity to provide funding for this product and expect a keen uptake before the SARS Section12J cut-off in July 2021,”

Section 12J of the Income Tax Act was introduced in 2009 to encourage South African 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 the investor’s taxable income, in the year that the investment is made. To date, South Africans have invested an estimated R10 billion into the 12J sector.

The deadline for the current tax year is February 28 2021, so it’s a case of now or never for investors who don’t want to miss the Flyt.