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Edited version of your written advice
Authorisation Number: 1013139354165
Date of advice: 15 December 2016
Ruling
Subject: Rental income and losses - deceased estate
Question
Before the titles transfer to the relevant beneficiary, is the rental income (or loss) included in the income tax return for the estate of the deceased?
Answer
Yes.
This ruling applies for the following periods
Year ended 30 June 201X
Year ended 30 June 201X
Year ending 30 June 201X
The scheme commences on
1 July 201X
Relevant facts and circumstances
The deceased died intestate.
The deceased owned X overseas rental properties and X Australian property.
The spouse of the deceased used their personal funds to keep the rental properties operational since the deceased's passing.
When title was eventually transferred to the deceased's spouse, they had 100% ownership of each property.
Relevant legislative provisions
Income Tax Assessment Act 1936 section 6-5
Reasons for decision
Rental and other rental-related income is the full amount of rent and associated payments that you receive, or become entitled to, when you rent out your property, whether it is paid to you or your agent. You must include your share of the full amount of rent you earn in your tax return. Generally, the profit or loss should be shared according to the legal interests of the owners.
In this case the deceased's ownership interest in the properties remained an asset of the deceased estate until the titles were transferred to the relevant beneficiary. It follows that the rental income (or losses) should be included in the income tax return for the deceased estate until the title was transferred to the beneficiary.