Version: BM
Owning property in Malaysia is a smart way to build wealth, whether you’re running an Airbnb or renting out residential properties.
But before you start celebrating your rental profits, there’s one thing that could catch you off guard: taxes.
Yes, the rental income you’re earning is taxable, and understanding how to handle it correctly is important to keeping things above board and avoiding unwanted penalties in the future.
Want to know more about rental income tax and how to file it properly? Keep reading to learn more!
Everything About Rental Income Tax
What is Rental Income Tax?
Rental income tax is the tax applied to money earned from renting properties.
In Malaysia, this income is combined with the taxpayer’s overall income, which includes salary and business earnings.
Rental income is taxed at a progressive rate, meaning that as your income increases, so does your tax rate.
Property owners can also deduct specific expenses related to their rental properties, like mortgage interest, maintenance costs, and property management fees, to lower their taxable income.
Who Should Pay Rental Income Tax?
The rental income tax in Malaysia is applicable to all property owners generating income from residential, commercial, or industrial properties.
This includes individuals renting out a single residential unit as well as large investors with multiple commercial properties, as the tax regulations affect anyone receiving rental payments.
Additionally, landlords earning rental income via property management firms or agents must report this income to the Inland Revenue Board of Malaysia (LHDN) for tax obligations.
When to Pay Rental Income Tax?
In Malaysia, the timeline for reporting rental income tax is the same as the individual tax filing deadline.
If you’re a property owner earning rental income in 2024, your tax filing deadline is April 30, 2025.
Remember, failing to file on time or not reporting your rental income can lead to penalties or fines from LHDN.
So, make sure you’re ready to submit your tax return well before the deadline!
Where to File Rental Income Tax?
Filing your rental income tax is easy using Malaysia’s LHDN MyTax portal. This platform helps both individuals and businesses file their taxes online quickly.
For a detailed step-by-step guide, read on How to File Your 2025 Income Tax in Malaysia.
If you have questions about the filing process, consider reaching out to a tax expert or a real estate agent who knows the tax rules for properties.
Why is it Important to Rental Income Tax?
Paying tax on rental income is not only a legal requirement but also promotes transparency in the real estate market and supports national growth.
By following tax laws, property owners can steer clear of penalties and ensure their rental income is properly recorded.
You can checkout the full list of the 2025 Income Tax Relief.
Knowing how rental income tax operates in Malaysia is important for property owners.
By keeping yourself updated and organized, you can reduce your tax responsibilities and make sure your property investment remains profitable and compliant in 2025.
What Happened If You Don’t Pay Tax?
If the property owner misses the tax return deadline on April 30, they might face a late filing penalty. This penalty can either be a set amount or a percentage of the taxes owed.
Additionally, if LHDN detects that rental income is not reported or paid, they may conduct an audit to investigate the property owner’s financial records.
In serious situations, not following tax rules repeatedly can lead to legal trouble.
This could mean facing prosecution, which might result in criminal charges, fines, or even jail time, especially for people who deliberately skip paying taxes.
So, remember to file your rental income tax by April 30 to avoid penalties or legal issues!
Stay on top of your tax responsibilities to ensure your property investment remains compliant.
Frequently Asked Questions (FAQ’s)
1. What is rental income tax in Malaysia?
Rental income tax is a tax on money earned from renting properties, taxed as part of your total income.
2. Who is required to pay rental income tax in Malaysia?
Anyone earning rental income from residential, commercial, or industrial properties must pay rental income tax.
3. How are rental income taxes calculated?
Rental income is taxed progressively, and you can deduct certain expenses to lower your taxable income.
4. When is the rental income tax filing deadline?
The filing deadline for 2024 rental income is April 30, 2025.
5. Where do I file my rental income tax in Malaysia?
You can file through the LHDN MyTax portal online.
6. Why is paying rental income tax important?
Paying tax is required by law, helps maintain market transparency, and avoids penalties.
7. What happens if I don’t pay my rental income tax?
You may face penalties, an audit, or even legal consequences for non-payment.
8. Can I deduct expenses related to my rental property from my taxable income?
Yes, you can deduct expenses like mortgage interest, maintenance costs, and management fees.
9. Is it worth hiring a tax consultant to file my rental income taxes?
Hiring a tax consultant ensures your taxes are filed correctly and helps you take advantage of deductions.
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