Section 481 Film investment - Is this a good deal?

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sam h

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I have an option to invest in a drama series. The basics of the investment are:

- Invest € 8300
- Loan (arranged) €16700
- Total Investment €25000

Tax Relief @ 41% €10250
Return € 1950 (ie - the tax saved)

On one hand, it seems like you will make 23.5% return, but if something crazy happens and the project doesn't go ahead, I'd be liable for the bank loan of €16700. The equity I invest is not repaid (therefore I'm really just buying the right to have the tax relief)

Initally I was keen, but now I'm not so sure - if the project overruns or the amount paid to the bank at the end is not enought to cover the loan, I would be liable for it.

It seems like a lot of risk for a relatively small return

Anyone else out there do one of these and what do you think? The scheme is being run by a well know company in this field - Horwath Bastow Charleton & the productio has been pre-sold, which should help reduce the risk.
 
It depends on the level of risk.

These investments have been known to turn sour but it's usually because of an administrative error on the part of the promoter or the production company running out of money.

Make sure that the entire production is taking place in Ireland. I have heard of projects where only a small amount of post production took place in Ireland...the problem arises if the producers run out of money. This relief exists to promote the Irish film industry so naturally if no work is done in Ireland, there's no relief.

I have done similar investments in the past and not had any issues. That's not to say that you will or won't...it's just my experience.
 
Sam,

I have had exactly the same sequence of thoughts as yourself. In the end the level of risk does come down to the individual projects. I have also looked into the one you are (not) referring to and it appears to be a significant enough production that has already been sold to a US network. No guarantees in that, but the relative risk seems to be low for this one.
 
Munsterbhoy said:
Sam,

I have had exactly the same sequence of thoughts as yourself. In the end the level of risk does come down to the individual projects. I have also looked into the one you are (not) referring to and it appears to be a significant enough production that has already been sold to a US network. No guarantees in that, but the relative risk seems to be low for this one.
Click to expand...

Interesting, I am looking at this at the moment....I presume if and where the production is being sold to is a very important consideration. anyone else have any further views on this...thanks
 
anyone in for the Thomas Edison one?
I'm not sure if it was sold to a network yet. Also, I know the risk is low, however, it is there, and the returns are around 6% from what I can calculate.. I think 6% is low based on the risk.
 
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