Cape Town’s new apartment and mixed-use property development The Harri is selling the last of its 48 studios and lofts to South Africans keen to get a massive tax deduction by investing in a Section 12J tax investment scheme. Partnered with Anuva Investments Limited, a registered venture-capital company and financial services provider, The Harri’s Section 12J Flyt Select Fund allows local buyers at the highest marginal tax rate of 45% to deduct from their tax liability the full amount of a new unit in the Harrington Street development in Cape Town’s East City Precinct. Only 12 of the 48 units remain unsold, priced between R1,399,995 for a studio and R2,699,995 for a loft.
“Government’s intention of stimulating economic activity and creating jobs by designing the Section 12J mechanism has been a win-win not only for local buyers, but also for us as developers,” says Jeffrey Kleu of property development company Sepia and Silk. “We’ve been able to keep a workforce of 250 people and 10 local businesses employed and contracted, while still offering a prime opportunity for buyers in an expensive area,” he says.
The development offers a blend of apartment living with open plan, tastefully furnished co-living and co-working spaces, and includes fireplace lounges, a TV room with a large smart TV and access to Netflix, three dedicated Zoom video-chat rooms, a rooftop terrace with a gas braai and mini-bar area, and hotel-grade amenities like Wi-Fi, a concierge, a housekeeping service, and 24 hour security.
SARS’s Section 12J tax break allows property buyers to write off their investment amount against their tax liabilities in the year in which they buy, provided that the investment is with a qualifying small to medium-sized enterprise (SMME). SMMEs are considered crucial for economic growth and job creation. Qualifying SMME sectors include hospitality, renewable energy and manufacturing.
“We’ve set aside a pool of units at The Harri to form part of our new aparthotel offering which will start operating from the moment we launch in May this year,” says Kleu. An aparthotel combines the best of five-star hotel amenities with luxurious self-contained apartment living. A buyer’s apartment is rented out to short-term staying guests, and the income generated is put towards servicing the buyer’s bond. The buyer covers any shortfalls or retains any surplus.
