For most property owners in Malaysia who rented out their property, the rental collected from tenant is regarded as a non-business source of income and therefore is charged to the owner's income tax under section 4(d) of the Income Tax Act, 1967.
The amount of property rental income need to be declared is the gross rental income deducted by certain expenses incurred by the property in order to generate the rental.
The expenses that are income tax deductible including:
- Assessment
- Quit rent
- Property loan interest
- Fire insurance premium
- Expenses on rental collection
- Expenses on rental renewal, including the stamp duty
- Expenses on repairs and maintenance
- Expenses on replacement of rental assets
- Property service charges, maintenance fees, sinking fund, and Indah Water bills
- Legal expenses on renewal of tenancy agreement, recovery of rental arrears, etc.
- Expenses on pest control
- Property agent fees/commission to renew the tenancy
- Advertising cost to get the tenant
- Property agent fees/commission to obtain the tenant
- Legal cost and stamp duty for initial tenancy agreement
- Expenses on renovation and improvement to get higher rental or to be more attractive to potential tenant
Note that rental income losses cannot be used to offset your other taxable statutory income of the year. The losses also cannot be carried forward to the next taxation year.
For more comprehensive information, you can refer to LHDN Malaysia Public Ruling No. 4/2011 : Income From Letting of Real Property.
15 comments:
Great sharing. Keep up the good work!
Have a question, If I take a loan from the bank and the interest rate is 4.4%, this interest rate is tax deductible? Please help thanks.
@liang_960406
Your house loan interest is deductible for rental income declaration only, and you must keep your bank statements as proof.
Inside your monthly bank statement, there will be a record showing how much is the exact interest amount charged for the month.
hi i have a question.
My monthly instalment is 1600 and my rental only 1100. Should I declare it? I thought off declaring it coz I wanted to make my commitment lower
@B Koay
Yes. And only the interest part of your instalment is deductable.
If after all the calculation, you get a zero or negative number, just keep all the documents and calculation details for 7 years.
Hi, my property only for investment purpose. Feb'17 collected key and start collected rental income effective Jul'17.
a) Shall i portion out those deductible expenses between period Jul'17 to Dec'17 or include all deductible expenses inccured for the year?
b) If negative calculation, can i carry forward losses to next year?
@Yoke Tan
It depends on whether you are declaring under Income Tax Act 1967 paragraph 4(a) or under paragraph 4(d).
Refer to the Public Ruling 4/2011 for more information.
Is "cukai taksiran" deductible?
@FOO
Yes for cukai tanah and cukai pintu.
Hi, I only collected 10 months rental instead of 12 months in year 2017, the remain 2 months rental I received in year 2018 and the tenant had paid 2 months security rental deposit. How much the rental income (10 months rental or 12 months rental) should I declare in year 2017? Thank you.
@Grace Wong
The rental income is taxed on received basis.
You can declare the 10 months under 2017 and the 2 months under 2018.
Make sure you keep all the records and evidence for possible audit.
hi , the property is under my father and my name (50/50). But my father already declare or submit the tax under his name . is it ok or we have to declare separately? what happen to the previous years which he already paid the taxes. thanks
@wongling
By right both of you have to declare 50% of it.
You can ask for professional advice from LHDN, your accountant or tax adviser whether it is OK to declare under one person or not.
hi, it is a tenancy agreement is a must if i want to deduct the expenses eg assessment , quit rent etc. what happen if in my previous tax filling i didnt have but i still declare the expenses deduction. thanks
@wongling
You need to have all the payment receipt for the expenses to show to LHDN in the event they conduct a tax audit on you.
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