Rental Income Tax in Malaysia 2026: Rates, Deductions and Filing
Property Lab editorial teamPublished 9 min read
Key points
- In Malaysia, rental income is taxed on the rent minus direct expenses such as quit rent, assessment, fire insurance, loan interest and ordinary repairs (LHDN Public Ruling No. 12/2018).
- Resident landlords add net rent to their other income and pay the normal YA 2026 rates of 0% to 30%, while non-resident individuals pay a flat 30% on Malaysian rent.
- Costs of getting the first tenant, such as agent commission, advertising and the first tenancy agreement's legal fee and stamp duty, are not deductible; later renewal costs are.
Contents
- Is rental income taxable in Malaysia?
- How much tax do landlords pay in Malaysia?
- Which expenses can landlords deduct in Malaysia?
- Worked example: tax on a rented condo
- What about vacant periods, the first tenant and several properties?
- Is there a rental income tax exemption in 2026?
- How do you declare rental income to LHDN?
- Frequently Asked Questions
- References
Rental income tax in Malaysia: rent from a property you let out is taxable, and you pay tax on the rent minus allowed expenses such as quit rent, assessment, fire insurance, loan interest and ordinary repairs. Resident individuals add this net rent to their other income and pay the normal rates of 0% to 30% for year of assessment (YA) 2026, while non-residents pay a flat 30% on rent.
Taxed on: gross rent minus direct expenses. Rate: your normal resident rate (0% to 30%), or a flat 30% if non-resident. Not deductible: costs of finding the first tenant, renovation and loan principal. Declare it every year in your income tax return through MyTax e-Filing.
Key numbers (as at October 2026)
- Top resident income tax rate, YA 202630%
- Non-resident rate on rent30%
- Form BE due (YA 2025, no business income)30 April
- Extra days allowed for e-Filing15
- Late filing penalty (LHDN)15%-45%
Also called: cukai pendapatan sewa (rental income tax), LHDN or HASiL (the Inland Revenue Board), Borang BE and Borang B (income tax return forms), tahun taksiran or YA (year of assessment), PR 12/2018 (the Public Ruling on income from letting of real property), paragraph 4(d) (rental income as a non-business source).
Is rental income taxable in Malaysia?
Yes: rental income in Malaysia is taxable, normally as a non-business source under paragraph 4(d) of the Income Tax Act 1967, and as business income under paragraph 4(a) only if the landlord actively provides comprehensive maintenance or support services, according to LHDN Public Ruling No. 12/2018.
- Typical condo or house landlord: paragraph 4(d). The ruling gives the example of an owner of two apartments whose tenants use the pool and gym run by the management corporation; those services come from ownership, not from the landlord, so the rent is non-business income.
- Business source: only when the landlord itself provides services such as lift maintenance, cleaning, security and car park management comprehensively and actively.
- Start date: for 4(d) rent, letting starts on the date the property is rented out for the first time.
How much tax do landlords pay in Malaysia?
Resident landlords in Malaysia pay tax on their net rent at the normal personal rates, which rise from 0% on the first RM5,000 of chargeable income to 30% above RM2 million for YA 2026, while non-resident individuals pay a flat 30% on rent, according to the PwC 2026/2027 Malaysian Tax Booklet.
| Chargeable income (RM) | Rate on this band | Tax up to band (RM) |
|---|---|---|
| 0 - 5,000 | 0% | 0 |
| 5,001 - 20,000 | 1% | 150 |
| 20,001 - 35,000 | 3% | 600 |
| 35,001 - 50,000 | 6% | 1,500 |
| 50,001 - 70,000 | 11% | 3,700 |
| 70,001 - 100,000 | 19% | 9,400 |
| 100,001 - 400,000 | 25% | 84,400 |
| 400,001 - 600,000 | 26% | 136,400 |
| 600,001 - 2,000,000 | 28% | 528,400 |
| Above 2,000,000 | 30% | - |
Resident individual rates for YA 2026 from the PwC booklet. Budget 2027 proposes changes for YA 2027 (for example 18% instead of 19% on the RM70,001 to RM100,000 band); these are proposals until passed. Chargeable income is after personal reliefs.
Because net rent is added to your salary and other income, the extra tax depends on your top band. The same RM10,000 of net rent costs much more for someone already in the 19% band than for someone in the 3% band.
Which expenses can landlords deduct in Malaysia?
For rent taxed under paragraph 4(d), Malaysian landlords can deduct direct expenses wholly and exclusively incurred to produce the rent, and LHDN's ruling lists six examples: assessment and quit rent, loan interest, fire insurance, rent collection costs, tenancy renewal costs and ordinary repairs.
| Deductible (4(d)) | Not deductible |
|---|---|
| Assessment and quit rent | Finding the first tenant |
| Interest on the purchase loan | Loan principal |
| Fire insurance premium | Renovation and upgrades |
| Rent collection and legal costs | Costs before first letting |
| Renewal or new-tenant costs | Personal expenses |
| Ordinary repairs | |
| Replacing furniture or aircon |
From PR 12/2018, paragraphs 8 and 12. First-tenant costs include advertising, the legal fee for the tenancy agreement, its stamp duty and the agent's commission. Loan principal and renovation are capital costs, not expenses of producing rent. The ruling's list of deductible items is not exhaustive; ask a tax agent about items such as maintenance charges.
The ruling draws the line at the first tenant: agent commission and legal fees to get the first tenant are not deductible, but the same kinds of cost to renew a tenancy or change tenant later are. Keep receipts for every year.
Worked example: tax on a rented condo
In this illustrative example, a resident landlord in Malaysia who rents out a condo for RM2,000 a month and has RM13,800 of allowable expenses pays tax on RM10,200 of net rent, which adds about RM1,138 to the tax bill of someone with RM60,000 of other chargeable income.
| Item | RM a year |
|---|---|
| Gross rent (RM2,000 x 12) | 24,000 |
| Assessment | (600) |
| Quit rent | (100) |
| Fire insurance | (300) |
| Loan interest | (12,000) |
| Ordinary repairs | (800) |
| Net rent taxed | 10,200 |
Illustrative figures, calculated with the YA 2026 resident rates. With RM60,000 of other chargeable income, tax rises from RM2,600 to RM3,738 (+RM1,138), because part of the rent falls in the 19% band. With RM30,000 of other chargeable income, the increase is RM462. A non-resident owner would pay 30% of RM10,200, or RM3,060. Reliefs and rebates are ignored.
What about vacant periods, the first tenant and several properties?
LHDN does not allow expenses for the period before a Malaysian property is first rented out, but it does allow them during a gap between tenants once the property has been let, provided it is ready to be let again.
- Before the first tenant: expenses for that period are not deductible and are cut proportionately; for example, quit rent and assessment for a year in which letting started in May are only partly allowed.
- Between tenants: allowed if the property was let before and is ready to be let again. The ruling's example allows a full year of assessment and quit rent despite a three-month gap.
- Temporary stops: expenses remain allowable during repairs, an official order or other events beyond your control, and for up to 2 years without a tenant after a tenancy ends, if the property is kept ready to let.
- Several properties: all your 4(d) rentals can be grouped as one source, so you report one combined rental income figure.
Is there a rental income tax exemption in 2026?
We found no rental income tax exemption for Malaysian landlords for YA 2026; older articles describe a 50% exemption on residential rents of up to RM2,000 a month, but the gazetted order we read, P.U.(A) 55/2019, applied to year of assessment 2018.
- What the 2018 order required: the landlord had to be a Malaysian citizen resident in Malaysia and the registered owner, the rent could not exceed RM2,000 a month per home, and the stamped tenancy agreement had to take effect on or after 1 January 2018.
- Today: if a new exemption is announced, it will only apply once gazetted. Check LHDN's website or ask a tax agent before you assume any relief.
Stamp duty on the tenancy agreement is a separate tax paid when the agreement is signed. Our tenancy agreement stamp duty guide shows how to calculate it.
How do you declare rental income to LHDN?
Landlords in Malaysia declare rental income in their annual income tax return through MyTax e-Filing: Form BE for resident individuals who do not carry on business and Form B for those who do, with Form BE due by 30 April and Form B by 30 June, plus 15 days' grace for e-Filing, based on LHDN's 2026 Filing Programme.
- Add up the year's rent for every property you let out.
- List allowable expenses with receipts: assessment, quit rent, fire insurance, loan interest statement, repairs and renewal costs.
- File online: LHDN made e-Filing mandatory for Forms BE, B and M (non-residents) and others through the MyTax portal.
- Pay any balance by the same deadline. Late filing can draw penalties of 15% to 45%, depending on the delay, according to LHDN.
- Keep records of the tenancy agreement, rent received and expenses in case LHDN asks.
The dates above are for YA 2025 returns filed in 2026. Income earned in 2026 (YA 2026) is declared in 2027; check LHDN's 2027 Filing Programme when it is published.
Frequently Asked Questions
Do I need to pay tax on rental income in Malaysia?
Yes. Rent from a Malaysian property is income. Most individual landlords are taxed under paragraph 4(d) on the rent left after allowed costs, at their normal rates for the year.
What is the rental income tax rate in Malaysia?
There is no separate rental rate for residents: net rent joins your other income and is taxed at 0% to 30% for YA 2026. Non-resident individuals pay a flat 30% on rent.
What expenses can I deduct from rental income?
Quit rent, assessment, fire insurance, interest on the loan used to buy the property, rent collection costs, renewal costs and ordinary repairs, plus replacing furniture for a furnished unit. Renovation, loan principal and first-tenant costs are not deductible.
Can I deduct the agent fee for my first tenant?
No. LHDN treats advertising, agent commission, legal fees and stamp duty to obtain the first tenant as the cost of creating the income, so they are not deductible. Similar costs for a renewal or a new tenant later are deductible.
Is there a 50% rental income tax exemption in 2026?
Not that we could find. The 50% exemption on homes rented for up to RM2,000 a month that older articles mention was gazetted for year of assessment 2018 under P.U.(A) 55/2019.
When must I declare rental income to LHDN?
With your yearly return. For YA 2025, Form BE was due on 30 April 2026 and Form B on 30 June 2026, and LHDN allowed 15 more days for e-Filing.
How do foreigners pay tax on rental income in Malaysia?
A foreign owner who is not tax resident pays a flat 30% on Malaysian rent, and the personal reliefs listed for residents do not apply. Non-resident individuals file Form M through MyTax.
References
- LHDN Public Ruling No. 12/2018: Income from Letting of Real Property (19 December 2018, PDF copy)Used for 4(d) vs 4(a), the start date of letting, deductible and non-deductible expenses, vacant periods, grouping properties and replacing furnishings.
- PwC: 2026/2027 Malaysian Tax Booklet, personal income taxUsed for YA 2026 resident rates, the Budget 2027 proposal, the 30% non-resident rate on rents and the residence rules.
- LHDN: Return Form Filing Programme for the Year 2026 (PDF)Used for the Form BE, B and M due dates and the 15-day e-Filing grace period.
- Bernama: LHDN opens e-Filing for YA 2025 (28 February 2026)Used for mandatory e-Filing and the 15% to 45% late filing penalties.
- P.U.(A) 55/2019: Income Tax (Exemption) (No. 2) Order 2019 (PDF copy)Used for the 50% exemption's conditions and its year of assessment 2018 scope.
Check LHDN (hasil.gov.my) for the latest Public Rulings and filing dates before you file.
This article is general information only, not tax advice. The worked example is illustrative; ask a licensed tax agent about your own situation.
Sources
- Public Ruling No. 12/2018: Income from Letting of Real Property — LHDN (copy hosted by CCS & Co)
- 2026/2027 Malaysian Tax Booklet: Personal income tax — PwC Malaysia
- Return Form Filing Programme for the Year 2026 — LHDN
- LHDN opens e-Filing for YA 2025 — Bernama
- Income Tax (Exemption) (No. 2) Order 2019, P.U.(A) 55 — Attorney General's Chambers (copy hosted by CCS & Co)
General information only, not legal, tax or investment advice. Rules and rates change; check the official source linked below before you act.
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