Ask a tax advisor on the topic of Tax return

Pre-gains and losses from closed real estate funds

February 20, 2012 | 30,00 EUR | answered by RAin/StBin Henriette Regulla-Schiessl

In 2006, I invested €20,000 in a fund called "Infraplan München Fonds 2." This was a closed real estate fund. (Please also see the following page: http://www.sueddeutsche.de/geld/immobilienfonds-muenchner-maerchen-1.981161) The expected return was 8.5% "guaranteed" upfront profits per year, with repayment scheduled after 4 years.

The upfront profits were regularly paid out until the end of 2010. I included these profits in my tax return each year, unfortunately in the KAP attachment, and paid capital gains tax on them.

Last year, Infraplan declared bankruptcy after the death of the managing director, just when they should have repaid the €20,000. As it stands now, it will be a total loss. The bankruptcy administrator is currently examining whether I have to repay the "upfront profit." If I am allowed to keep the upfront profits, they are at most a repayment of the invested money, not profits.

My questions regarding this are:
- Can I reclaim the taxes I paid on the "upfront profits" in previous years from the tax office? If yes, how?
- Can I only claim the loss of €20,000 for the year 2011? If yes, how can I do that (through the KAP attachment, GSE, etc.)?
- Do these losses only reduce the KAP income or also my regular income?
- Can I carry forward these losses for future years? If yes, for how many years?

RAin/StBin Henriette Regulla-Schiessl

Dear questioner,

Thank you for your inquiry, which I will answer in the context of an initial consultation, taking into account your contribution and the rules of this platform.
The response is based on the facts you have provided. Adding, omitting, or changing information, ambiguities, or inaccuracies in the facts can change the tax result.

From the website you mentioned, I gather that the closed-end real estate fund is a limited partnership (KG).
In principle, the limited partner is liable with his or her capital contribution according to § 171 of the German Commercial Code (assuming that you are such a limited partner).
If the contribution has been made, further liability is excluded.

It appears that the capital contribution has now been repaid! The insolvency administrator is rightly examining this. If the liability contribution has been partially repaid, it is deemed not to have been made according to § 172 (4) of the German Commercial Code and can therefore be reclaimed by the insolvency administrator from you.

Since the pre-profits probably constituted a return of the contribution, the amounts were incorrectly taxed in investment income (Anlage KAP).
However, uniform profit determinations should have been made by the KG as basic assessments for the income taxation of individual limited partners.
You can generally only achieve a change in your assessment if the corresponding income tax assessments are either subject to review or a change is possible according to tax law.
However, it depends on the basic assessments of the KG. It may be possible to challenge this.
You may need to consult a tax advisor to review the situation. An assessment cannot be made within the framework of this platform.

Regarding the tax deductibility of the capital loss, this depends on the allocation of any loss shares by the KG to you. Basic assessments would also be required for this.
Since I am not familiar with the capital accounts of the KG, you will need to wait for information from the KG or the insolvency administrator. Basic assessments are taken into account by the tax office ex officio.

Yours sincerely,
Henriette Regulla
Attorney at Law
Tax Advisor