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There will be no monthly 5% accumulated interested, since taxes due are 0, so the only left is a penalty.....?"
You are essentially correct that there will be no immediate monetary penalty since there is no tax due, but that is only applicable to "at this point in time".
Recall that if no return is filed, the statute of limitations (typically three years in most instances) never runs and, as a result, the IRS can initiate an audit at any time. Thus, imagine a scenario in which years have passed and you have lost documentation for attorneys fees and expenses for the rental and the only thing left is the gross rental income - the IRS is going to come after the estate for taxes, interest, and penalties based on that gross rental income.
