How rental income is taxed in Malaysia: the rules in plain words
If you rent out a house, an apartment, a shop or land, the rent is income and goes on your tax return, whether you file Form BE or Form B. The rules come from LHDN’s Public Ruling No. 12/2018, Income from Letting of Real Property (19 December 2018). This guide puts them in plain words, with the ruling’s paragraph for each.
For most landlords, rent is a non-business source
Letting is a business only when you, or someone you hire, provide maintenance and support services comprehensively and actively — looking after the building’s structure, common areas and exterior (PR 12/2018 §4). Otherwise it is a non-business source under paragraph 4(d) of the Income Tax Act. The ruling’s own example: an apartment owner whose tenants use a pool kept by the management corporation, while the owner only pays maintenance fees (§5.2, Example 7). Security services alone are not “comprehensive” (§4.2.1).
What counts as rent, and when
Rent includes any amount received for the use or occupation of the property, including premiums and other receipts in connection with its use (§3.6). Rent received in advance is income for the year in which you receive it (§9.1).
All your properties count as one source
If you let several properties as non-business lettings, they are grouped as one non-business source (§7.1(b)). Their rent and their costs are added together, so a loss on one property is absorbed by the profit on another (Example 14).
Costs you can deduct
The ruling lists these direct costs (§8.2): the local authority’s assessment and the land office’s quit rent; interest on the loan that financed the property; the fire insurance premium; the costs of collecting rent; the costs of renewing a tenancy or changing tenant; and ordinary repairs that keep the property in its existing state. For a furnished letting, replacing furniture or an air conditioner also counts (§12).
Costs you cannot deduct
The cost of getting your first tenant — advertising, the legal cost of the tenancy agreement, stamp duty and the agent’s commission (§8.3). Costs for the period before the property is first let (§8.5). Costs while it is not rented out (§8.4.1), unless it sits empty and ready to let after having been let, or the letting stops temporarily for a reason the ruling allows, such as repairs (§8.4.2). And capital allowances, which belong to a business source only (§10.1).
When the costs are higher than the rent
For a non-business source, if the deductible costs are more than the rent, your rental income for tax is nil. The loss cannot be set against your other income, and it cannot be carried forward to later years (§7.1, Example 16).
Keep the paperwork
Keep the tenancy agreements, the bills and the receipts behind every cost. Documents relating to your income must be kept for seven years from the end of the year of assessment they relate to (Income Tax Act 1967, s.82A). This guide summarises the ruling; it does not replace it. For a property let with comprehensive services, or anything unusual, read Public Ruling No. 12/2018 in full or ask a licensed tax agent.
This article is general information, not tax advice for your specific situation. Figures refer to YA 2025 and cite LHDN's official sources; rules can change between years.
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