Guide to Property Taxes in Malaysia
Tax Rate on Rental Income |
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| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 30% | 30% | 30% |
Nonresidents are liable to pay tax on Malaysian-sourced income. Married couples may file for joint assessment, but separate assessment is deemed to be more effective in lowering overall tax liability. Personal reliefs (tax allowances) are not granted to nonresidents.
Income Tax
Nonresidents are taxed at a flat rate of 30% on their Malaysian-sourced income.
Rental Income
Rental income is taxed at a flat rate of 30%. Income-generating expenses are deductible from the gross rent such as interest expense, cost of repairs, assessment tax, quit rent, and agent’s commission. Depreciation does not qualify for tax deductions against income, and capital allowances are not available for residential and commercial buildings.
Rental income earned by nonresidents may be subject to 10% withholding tax. The withholding tax may be credited against the nonresident’s income tax liability.
Capital Gains Tax
Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property’s ownership period or holding period prior to its sale.
Real Property Gains Tax - Individuals 2024
| Ownership Period | Tax Rate - Malaysian Citizens & PRs | Tax Rate - Non-Citizens & Foreigners |
| Up to 3 years | 30% | 30% |
| 3 years - 4 years | 20% | 30% |
| 4 years - 5 years | 15% | 30% |
| Over 5 years | 0% | 10% |
| Source: Global Property Guide | ||
Income Tax
Income and capital gains earned by nonresident companies are subject to corporate income tax at a flat rate of 24%. Income-generating expenses are deductible when calculating taxable income.
The applicable corporate income tax rate is 24% for 2024.
Capital Gains Tax
Disposals of Malaysian real property are subject to real property gains tax (RPGT). RPGT is levied at progressive rates, depending on the property’s ownership period or holding period prior to its sale.
Real Property Gains Tax - Companies 2024
| Ownership Period | Tax Rate - Companies |
| Up to 3 years | 30% |
| 3 years - 4 years | 20% |
| 4 years - 5 years | 15% |
| Over 5 years | 10% |
| Source: Global Property Guide | |
Corporate Rental Income Tax
Rental income earned by nonresident companies is taxed at a flat rate of 30%.
Property Buying and Selling Taxes/Costs
Total roundtrip transaction costs in Malaysia are between 1% - 4%.
| Cost | Amount |
| Property Transfer Tax | 1.00% - 4.00% |
| Agent Fee (Buyer) | - |
| Agent Fee (Seller) | 2.00% - 2.75% |
| Legal Fees | 0.50% - 1.00% |
| Notary Fees | 0.10% |
| Roundtrip Cost | 3.60% - 7.85% |
| Source: Global Property Guide, KPMG | |
Property Holding Tax
Assessment Tax on Residential Property
The assessment tax is a local tax based on the annual rental value of the property, as assessed by the local authorities. It is generally levied at a flat rate of 6% for residential properties and payable in two installments.
Quit Rent
The quit rent is a local tax levied on all landed properties, payable annually at a rate of 1 sen (US$0.003) to 2 sen (US$0.006) per square foot, wherein MYR1 (US$0.25) is equal to 100 sen (cents). The quit rent liability is generally estimated to be less than MYR100 (US$25) per year.