Open-ended real estate funds, which experienced liquidity difficulties in the wake of the financial market crisis and ultimately had to be wound up as a result, have permanently stopped issuing and redeeming their shares. They are therefore referred to as closed open-ended real estate funds. The German Federal Fiscal Court has now decided that the partial value of shares in such closed open-ended real estate funds corresponds to the exchange price at which they are traded (BFH 13th February 2019, XI R 41/17). The value of such shares is expected to be permanently impaired if the exchange price (secondary market value) fell below the book values on the balance sheet date and the price loss exceeds the de minimis limit of 5%.
In our opinion, in the case of partial write-downs for these shares to the secondary market value, the investor's real estate gain must also be adjusted accordingly. However, due to the lack of ripeness for adjudication, the German Federal Fiscal Court did not decide this question and has instead referred it back to the lower courts.