Private ruling: Rental income and losses - deceased estate
Date of advice: 15 December 2016
Published: May 2017
Ruling period: Year ended 30 June 201X | Year ended 30 June 201X | Year ending 30 June 201X
Date scheme commenced: 1 July 201X

Ruling: Q1: 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? | A1: Yes.

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: Summary: 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.