How rental income is taxed in Malaysia (LHDN)
Figures checked against official sources on
Rent from property in Malaysia is taxed as part of your income: after deducting allowed expenses such as assessment, quit rent, loan interest, fire insurance and ordinary repairs, the net rent is added to your other income and taxed at the resident rates of 0% to 30%. A non-resident individual pays a flat 30%. A resident landlord with no business income reports it on Form BE, due 30 April.[2],[4],[6],[7]
How rent is taxed
Rent is income under section 4(d) of the Income Tax Act 1967. It is treated as business income under section 4(a) instead only when the owner provides maintenance or support services comprehensively and actively — for example, running a building with cleaning, security and other services.[1],[2]
| Chargeable income | Rate |
|---|---|
| RM0 – RM5,000 | 0% |
| RM5,001 – RM20,000 | 1% |
| RM20,001 – RM35,000 | 3% |
| RM35,001 – RM50,000 | 6% |
| RM50,001 – RM70,000 | 11% |
| RM70,001 – RM100,000 | 19% |
| RM100,001 – RM400,000 | 25% |
| RM400,001 – RM600,000 | 26% |
| RM600,001 – RM2,000,000 | 28% |
| Above RM2,000,000 | 30% |
Budget 2027 proposes lower rates on some bands from year of assessment 2027: 18% instead of 19% on RM70,001–RM100,000, a new RM100,001–RM150,000 band at 24%, and 30% from RM1 million instead of RM2 million. These are proposals until the Finance Act is passed.[5]
Expenses you can and cannot deduct
- Assessment paid to the local authority and quit rent paid to the land office.
- Interest on a loan taken to buy the property that is let.
- Fire insurance premium on the property.
- Rent collection fees, and legal costs to enforce rent collection.
- Costs of renewing a tenancy or changing tenant.
- Ordinary repairs that keep the property in its existing state.
- For a furnished let that is not a business, the cost of replacing furnishings such as furniture and air conditioners.
Source[2]
Not deductible: the initial costs of getting the first tenant — advertising, the legal cost of preparing the tenancy agreement, its stamp duty and the agent’s commission — because they create the rental income rather than earn it.[2]
For years of assessment 2018 to 2020, resident Malaysian citizens received a 50% income tax exemption on residential rent of up to RM2,000 a month per home let under a valid tenancy agreement. We found no official extension beyond YA 2020; check with LHDN or a tax agent whether any exemption applies to your year.[3]
Worked example
- Rent received for the year
- RM30,000
- Less assessment and quit rent
- − RM900
- Less interest on the housing loan
- − RM14,000
- Less fire insurance premium
- − RM350
- Less ordinary repairs
- − RM750
- Net rental income
- RM14,000
- Tax on RM60,000 without the rent
- RM2,600
- Tax on RM74,000 with the rent
- RM4,460
- Extra tax because of the rent
- RM1,860
The expense figures are illustrative. Chargeable income here is income after personal reliefs and before rebates.
Landlords who are not tax resident
A non-resident individual is taxed at a flat 30% on chargeable income, including net rent from Malaysian property, and cannot claim personal reliefs.[1],[6]
Filing deadlines
| Who | Form | Deadline | e-Filing grace period |
|---|---|---|---|
| Resident, no business income | e-BE | 30 April 2026 | 15 days |
| Resident carrying on a business | e-B | 30 June 2026 | 15 days |
| Non-resident, no business income | e-M | 30 April 2026 | 15 days |
Frequently asked questions
Is rental income taxable in Malaysia?
Yes. Rent is income under section 4(d) of the Income Tax Act 1967. Net rent, after allowed expenses, is added to your other income and taxed at your rate.[1],[2]
Can I deduct my housing loan instalments from rental income?
LHDN’s ruling allows the interest paid on a loan taken to buy the property that is let. It does not list the principal part of the instalments as a deductible expense.[2]
Can I deduct the agent fee and stamp duty for my first tenant?
No. Advertising, the legal cost of the tenancy agreement, its stamp duty and the agent’s commission for the first tenant are initial expenses and are not deductible. Costs of renewing a tenancy or changing tenant are deductible.[2]
What tax rate does a foreign landlord pay on Malaysian rent?
A non-resident individual pays a flat 30% and cannot claim personal reliefs.[6]
Which form do I use to declare rental income?
For year of assessment 2025, a resident who does not carry on a business filed Form e-BE by 30 April 2026, with 15 days’ grace for e-Filing. A resident who carries on a business files Form e-B by 30 June.[7]
Sources
- Income Tax Act 1967 (Act 53), updated text as at 21 May 2024 — Attorney General’s Chambers, hosted by LHDN, checked
- Public Ruling No. 12/2018: Taxation of Income from Letting of Real Property — LHDN, checked
- Budget 2018 tax measures, Lampiran 2: 50% exemption on residential rental income (YA 2018–2020) — Ministry of Finance Malaysia, hosted by LHDN, checked
- Individual income tax rates, YA 2023, 2024 & 2025 — LHDN, checked
- Budget 2027 tax measures, 9 October 2026 (proposals until enacted) — Ministry of Finance Malaysia, checked
- Tax treatment of residents and non-residents — LHDN, checked
- Return Form Filing Programme for the Year 2026 — LHDN, checked