Taxation of rental income from an unadministered estate for Personal Income Tax

The death of a natural person can create situations of legal uncertainty regarding the management of their assets, especially when there are properties that generate income. One of the most relevant issues is determining who must pay tax on the rentals of said assets when the estate has not yet been accepted or distributed.

What the DGT has ruled

The Directorate General of Taxes (DGT) has specified that an unadministered estate (herencia yacente) does not hold the status of a taxpayer for Personal Income Tax (IRPF). Instead of acting as an independent taxable person, the estate functions as a group of persons to whom the income generated by the hereditary estate is attributed.

In this sense, the DGT establishes that income derived from rentals maintains its nature as income from real estate capital, as it does not constitute an economic activity. This income must be attributed to the heirs following the applicable rules or agreements or, in their absence, shall be distributed in equal shares among them.

What it means for you

If you are an heir to a deceased person and there are rented properties whose inheritance has not yet been formally accepted, you must take into account that this income does not remain in a fiscal limbo. The tax administration expects these returns to be included in the taxable base of each heir in their IRPF declaration.

This criterion implies that, although the partition of the estate is a subsequent process, the obligation to declare rental income is immediate and falls directly on the beneficiaries of the hereditary estate.

What you should do

In this situation, it is necessary to identify the participation share of each heir to ensure the correct attribution of income. It is fundamental to document the income received from the properties of the unadministered estate to avoid discrepancies with the Tax Agency at the time of the income tax return. Since the regulations of Law 35/2006 and the General Tax Law govern this matter, it is recommended to assess the particular situation of each succession to determine the exact distribution of the income.