Is rental income taxable in Malaysia?
Yes. Rental income from Malaysian property is taxable. Ordinary passive residential letting is usually Section 4(d), while active service-heavy letting can be Section 4(a). The tax position depends on classification, deductible expenses and residence status.
Rental income is taxed under Section 4(a) of the Income Tax Act 1967 (a business source) only when maintenance and support services are provided comprehensively and actively; otherwise it is taxed under Section 4(d) as a non-business (investment) source. The classification decides what you can deduct and whether losses and capital allowances are available.
For the full filing guide, read rental income tax Malaysia. This page answers the core taxable-or-not question.
What can reduce taxable rental income?
Allowable expenses can reduce taxable rental income. They are not the same as personal reliefs, and they must be tied to producing the rental income.
For ordinary residential letting taxed under Section 4(d), LHDN allows a deduction for direct expenses wholly and exclusively incurred in producing the rental income: assessment and quit rent; interest on the loan taken to buy the property; fire insurance premium; rent-collection and rent-enforcement costs; the cost of renewing a tenancy or changing tenant (including agent commission for a renewal/subsequent tenant); and repairs to keep the property in its existing state.
| Item | Taxable-income impact | Read next |
|---|---|---|
| Loan interest | Deductible under approved anchor | mortgage interest guide |
| Assessment and quit rent | Deductible under approved anchor | deductions guide |
| Repairs to existing state | Deductible under approved anchor | repairs deduction guide |
| First-tenant advertising | Not deductible as initial expense | deductions guide |
| Special landlord relief | No specific relief | This page |
There is no income-tax relief specific to being a landlord. Rental income is reduced by the allowable expenses under Public Ruling 12/2018, and then the individual's ordinary personal reliefs apply to total income in the normal way for residents. Non-residents get no personal reliefs at all.
What first-letting costs are not deductible?
The first-tenant trap is real. Costs that create the first rental source are not treated like recurring costs of earning rent from an existing tenant.
Costs of getting the FIRST tenant are initial expenses and are NOT deductible against rental income, because they create the income source rather than produce income from it. LHDN names these specifically: advertising cost, legal cost to prepare the first rental agreement, stamp duty, and agent commission — all for the first letting. This applies whether the rental is taxed under Section 4(a) or 4(d).
Do not hide first-letting costs inside a general "marketing" or "agent" line. If the cost was for the first letting, the approved anchor says it is not deductible.
What if the landlord is non-resident?
Non-resident treatment is materially different, so do not use resident assumptions. The verified anchor gives the rate and denies personal reliefs for non-residents.
A non-resident individual landlord is taxed at a flat 30% on net Malaysian rental income (with effect from Year of Assessment 2020). Non-residents get no personal reliefs, rebates, or the graduated resident rates, but allowable rental expenses are still deductible — the 30% applies to the income after deductions, not the gross rent.
This is one of the places where older or generic guides can mislead landlords. Keep the wording tied to the verified LHDN anchor.
Does SST or e-Invoice make ordinary residential rent non-taxable?
No. SST and e-Invoice are separate compliance questions. They do not make rental income non-taxable.
Letting of residential housing — terrace houses, apartments, condominiums, bungalows, serviced suites — is outside the scope of service tax, so a normal residential landlord does not charge SST on rent. Service tax applies to commercial and certain non-residential rental/leasing services, at 6% from 1 January 2026, and only once the provider exceeds the RM1.5 million taxable-turnover registration threshold for rental/leasing services.
Individual landlords are not yet required to issue e-Invoices for personal rental income if their annual income/sales are below RM500,000; those between RM500,000 and RM1 million are brought in from 1 July 2026. Separately, where the tenant is a business, the business tenant issues a self-billed e-Invoice for the rent it pays. e-Invoicing runs on LHDN's MyInvois system.
FAQ
Is rental income always Section 4(d)?
No. The approved anchor says active, comprehensive maintenance and support services can make it Section 4(a). Otherwise it is Section 4(d).
Can I deduct mortgage interest?
Yes, for ordinary Section 4(d) letting, interest on the loan taken to buy the property is within the approved deductible-expense anchor.
Can I claim a landlord relief?
No. There is no income-tax relief specific to being a landlord.
Do non-resident landlords pay tax on gross rent?
The approved anchor says the 30% applies to net Malaysian rental income after allowable deductions, not gross rent.
Does residential rent have SST?
The approved anchor says letting of residential housing is outside the scope of service tax for normal residential landlords.
Does CP500 apply to rental income?
Yes. See the CP500 rental income reduction guide.