Reversal of investment in closed-end real estate fund

The Federal Fiscal Court has ruled on the allocation of the purchase price in the event of the reversal of an investment in a closed-end real estate fund.

In the past, closed-end real estate funds have not always generated the return investors had hoped for, which has sometimes led to legal proceedings between fund operators and investors. In one such case, the Federal Fiscal Court has now ruled on the tax valuation of the amount paid by the fund for the reversal of the fund participation. According to this ruling, if there are indications that the consideration paid by the fund, referred to as the purchase price, was also paid in part for other obligations of the investor, in particular the waiver of claims for damages and the withdrawal of lawsuits, then the agreed purchase price must be split.