MASTER INVESTOR
investment .
For example , assuming you ’ re an employee paying PAYE : If you earn R1million in a given tax year and invest R1million in a 12J company in the same tax year , SARS will see your income theoretically reducing from R1million to R0 . You will then be due a tax refund on the R1million depending on which tax bracket you fall into . The more you earn , the more tax you would have paid and the more beneficial the incentive , with top taxpayers saving 45 % of their investment .
The investment is then channeled into qualifying companies that are in need of capital to grow ( SMMEs ) with an emphasis on job creation , ultimately boosting the economy and the tax base .
Investors benefit from the growth of the underlying companies and are further rewarded for their investment into these companies via the tax refund .
Flyt Magic According to Flyt , when they embarked on trying to solve the 12J property puzzle , their overarching intention was to enable their investors ( buy-to-let property investors in most cases ) to purchase units in their developments and get the healthy tax deduction at the same time .
" We wanted to create the opportunity for SARS to finance up to 45 % of the property purchase for the investor , resulting in a huge discount on the purchase price and / or reducing the investors ’ finance required for the investment . The knock-on effect for us as developers is higher sales tempos and realising profits from our core business , property development . Thankfully , after careful consideration , legal advice and some innovative tax structuring with tax specialists Hobbs Sinclair , we succeeded in that goal and the result was Flyt Select .
Chicken or the Egg ? Assuming you are “ on-page ” with how the incentive works and the logic behind using SARS to fund your property investment , the question is - what is holding you back ?
Well , there is generally one quite large barrier to overcome , the need for money . Before you can use your tax to invest in a property , you need to first invest your taxable income , i . e . R1million in cash before the deadline to get your R300k ( or more depending on your tax bracket ) tax refund deduction .
Who has that sort of money lying around , right ? Introducing Flyt 12J ( Pty ) Ltd , a Flyt Property Investment subsidiary , and registered credit provider . Flyt 12J provides investors with bridging loans to invest into the 12J company , in facilitating their tax deductions before the final deadline of 30 June 2021 and solving the problem of needing to have the money upfront . Once the investor receives the tax refund from SARS , these funds along with the home loan go towards purchasing the unit - absolute gamechanger !
So what ’ s the catch , surely there is a catch ?
• The property cannot be lived in by the investors for the first 5 years
• The property needs to be furnished * and managed on a short-term basis
* Don ’ t worry , all Flyt units come fully furnished and they have an on-site operator in place at all our developments
8 MAY 2021 SA Real Estate Investor Magazine