Rental Income Tax in Malaysia: A Guide for Resident and Non-Resident Landlords

The first rent payment lands in your account and a quiet question follows: “How much of this do I owe LHDN?” Many first-time landlords either worry too much, assuming the tax will swallow the rent, or too little, assuming a small rental does not need declaring. Both are expensive mistakes. The good news is that Malaysian rental income tax is predictable once you know three things: what counts as income, what you can deduct, and whether you are a resident.

This guide explains how rental income tax in Malaysia works for both resident and non-resident landlords, which expenses LHDN generally allows, which forms to file and when, and three worked examples using rents typical near the JB CIQ. Singapore-based owners wondering whether Singapore also taxes JB rent should read our companion guide, Singapore tax on JB rental income. This is general information, so check your own case with a tax agent.

How is rental income taxed in Malaysia?

Rent from a Malaysian property is taxed in Malaysia, on the net figure after allowable expenses. For most individual condo owners it is treated as non-business rental income under section 4(d) of the Income Tax Act 1967.

LHDN’s Public Ruling No. 12/2018, Income from Letting of Real Property, draws the line. If the owner simply lets the unit, and services such as security and cleaning of common areas are provided passively by the building’s management body, the rent is section 4(d) rental income. Only if the owner actively and comprehensively provides maintenance or support services can the letting be treated as a business under section 4(a). A standard long-term let of a JB condo is almost always the first type.

What this means for you: your rate depends on your residence status, not your nationality. A Malaysian who has moved to Singapore can be non-resident; a Singaporean who lives in JB and commutes can become resident. Check your days.

Resident or non-resident landlord? How to tell

Malaysian tax residence for individuals is based mainly on physical presence: generally 182 days or more in Malaysia in a calendar year makes you resident, with additional rules that can link shorter stays to adjoining years. Citizenship does not decide it.

Three common JB situations show why this matters:

• Malaysian living in JB, working in Singapore. Someone who sleeps in JB most nights and commutes daily usually spends well over 182 days in Malaysia, so is generally a Malaysian resident even though the salary is earned in Singapore. Their JB rent, if they also let out a second unit, is taxed at resident rates.
• Malaysian who has moved to Singapore. A Malaysian who now lives in Singapore and visits JB only at weekends may fall below 182 days and be non-resident, paying the flat 30% on JB rent.
• Singaporean investor. A Singaporean who owns a JB condo but lives in Singapore is typically non-resident in Malaysia.

Count your days from your passport or immigration records each year, because the answer can change when your routine does. If you move across the Causeway mid-year, or your days are close to the line, ask a tax agent to look at both countries together; Singapore residence rules are separate.

Malaysian income tax rates for resident landlords

Resident individuals pay progressive rates on total chargeable income, which includes net rent. Rental income therefore takes the rate of your top band, which for many salaried landlords is 11%, 19% or 25%.

These are the prevailing resident rates as summarised by PwC (reviewed June 2026). Residents with chargeable income up to RM35,000 also have RM400 deducted from the tax payable (an individual tax offset). Budget 2027 has proposed lower rates and a higher individual relief from year of assessment 2027, subject to the Finance Bill, so check the final figures when you file for that year.

Deductible expenses for landlords under Public Ruling 12/2018

You can generally deduct the running costs of earning the rent, but not the costs of buying, first setting up or improving the unit. Keep receipts for everything.

Generally deductible

• Assessment (cukai taksiran) and quit rent (cukai tanah)
• Interest on the loan used to buy the property (not the principal), from when the unit is first let
• Fire insurance premiums
• Repairs and maintenance, such as repainting, replacing broken tiles or fixing leaks
• Costs of collecting rent, renewing a tenancy and finding a subsequent tenant
• Replacing furnishings (for example a worn-out sofa or refrigerator)

Generally not deductible

• Loan principal repayments
• The cost of finding the first tenant and preparing the first tenancy agreement
• The initial purchase of furniture and appliances
• Renovations that improve the unit; keep these records, because they can reduce the chargeable gain for real property gains tax (RPGT) when you sell
• Expenses incurred before the unit is first let

But what about the months between tenants? Expenses during a temporary vacancy between tenancies generally remain deductible as long as the unit is ready to be occupied and available for letting. Maintenance fees and sinking fund contributions are treated differently in different guides, so ask your tax agent how to treat them in your return.

Worked examples: tax on a 2-bedroom near the JB CIQ

The three examples below use the same unit, so you can see how residence status changes the bill. Rent is set at RM2,800 a month, the Q4 2026 median asking rent for a 2-bedroom in the RTS / CIQ core in our JB RTS and CIQ rent index. Other figures are illustrative.

Example 1: Malaysian resident with a salary

Suppose your chargeable income from employment, after reliefs, is RM80,000. Tax on RM80,000 is RM3,700 plus 19% of RM10,000, which is RM5,600. Adding RM21,000 of net rent takes chargeable income to RM101,000: RM9,400 plus 25% of RM1,000, or RM9,650. The rent adds about RM4,050 of tax, roughly 12% of gross rent.

Example 2: non-resident owner based in Singapore

A non-resident pays a flat 30% on the same RM21,000, which is RM6,300, about 19% of gross rent. No personal reliefs apply. Without the deductions, tax on the gross rent would have been RM10,080, which is why good records matter most for non-residents.

Example 3: resident retiree whose only income is rent

Net rent of RM21,000, less the RM9,000 individual relief, leaves RM12,000 of chargeable income. Tax is 1% of RM7,000, or RM70, and the RM400 tax offset for chargeable income up to RM35,000 reduces it to nil. The return should still be filed.

What this means for you: for many landlords, tax takes between nothing and about a fifth of the gross rent. Model your own case with the JB property calculator and our rental yield guide, which shows how to turn gross yield into net yield.

Which form to file and when

Most individual landlords without business income file Form BE if resident or Form M if non-resident, online through MyTax, by 30 April of the following year. LHDN sets a short e-filing grace period each year.

In April 2026 The Star reported that LHDN gave taxpayers without business income until 15 May 2026 to submit their returns for year of assessment 2025. The programme can change each year, so check LHDN’s filing programme before you file. Net rent goes in the section for statutory income from rents, and supporting documents (tenancy agreements, receipts, loan interest statements) should be kept for seven years.

• First time? Register for an income tax number on MyTax (e-Daftar) if you do not already have one.
• Instalments: landlords with significant non-salary income may be placed on LHDN’s CP500 instalment scheme; keep your estimates realistic.
• Joint owners: each co-owner generally declares their own share of the net rent; confirm the split with your tax agent.

A simple yearly record-keeping routine

The easiest tax return is one you prepare a few minutes at a time. This routine suits owners with one or two units.

1. Monthly: confirm rent received and save repair and building receipts in one dated cloud folder.
2. Quarterly: update a simple sheet with income and expenses in three columns: deductible, not deductible, to check.
3. January: download last year’s loan interest statement and gather assessment, quit rent and insurance receipts.
4. February to March: work out net rent and confirm your residence status for the year.
5. April: file on MyTax before the deadline and archive everything for seven years, including renovation receipts you may need for RPGT when you sell.

Common mistakes Malaysian landlords make

Most problems come from missing records, not complicated law. Avoid these and your rental tax becomes a short annual task.

• Not declaring a small rental. There is no general threshold below which rent is exempt; even modest rent belongs on the return. Past budgets have offered temporary relief for some residential rents, so check whether any applies in the year you file rather than assuming.
• Claiming loan principal. Only the interest portion is deductible. Ask your bank for an annual interest statement.
• Claiming first-time furnishing. The initial furniture and appliance package is not deductible; replacements later are.
• Unstamped tenancy agreements. A properly stamped agreement is your evidence of rent received. Our tenancy agreement checklist explains stamping.
• Paying rent into a mixed account. A separate Malaysian account for rent and property bills makes the year-end summary simple.

Planning ahead: buying to let near the RTS

Tax is a cost to plan for, not a reason to avoid letting. Rents near the CIQ are supported by cross-border commuters, and the RTS Link is targeted to start passenger service in February 2027, according to the LTA and MOT.

If you are comparing units to buy and let, run the after-tax numbers for your own residence status before you commit. Causewayz Square, EXSIM’s freehold development about 800 m from the Bukit Chagar RTS station, is targeted for completion around 2030, which gives buyers time to plan financing, furnishing and their first tenancy. See also our property management guide for remote landlords. WhatsApp us for the latest SPA price list and floor plans.

Sources

• PwC Worldwide Tax Summaries: Malaysia, taxes on personal income (reviewed Jun 2026)
• CTIM: Summary of LHDN Public Ruling No. 12/2018, Income from Letting of Real Property
• LHDN: Public Rulings
• University of Nottingham Malaysia (CELFE): Claiming property-related expenses for tax deduction
• StashAway: How to file income tax in Malaysia, forms and deadlines
• The Star (Apr 2026): 2025 tax return form deadline extended to May 15

This guide is general information, not financial or tax advice. Please check with a tax adviser for your own situation.