by 
13th November 2024
About Real Estate Taxes in Malaysia
For individuals or companies looking to purchase or own property, understanding the types of taxes on real estate in Malaysia is essential. This guide covers five major taxes and fees that apply to real estate transactions in Malaysia, so you’re well-prepared for what to expect.
1. Stamp Duty
Stamp Duty is a tax applied to the transfer of property, based on the First Schedule of the Stamps Act 1949. Both individuals and companies purchasing real estate are required to pay stamp duty on the transfer instrument and, if they are financing the purchase with a loan, on the loan agreement as well.
- Transfer Instrument: The stamp duty is calculated on the higher of either the purchase price or the current market value, ranging from 1% to 4%.
- Loan Agreement: Stamp duty for loans is calculated at a flat rate of 0.5% on the loan amount.
Understanding these costs in advance will help buyers budget accurately for their purchase.
2. Real Property Gains Tax (RPGT)
While Malaysia generally does not tax capital gains, Real Property Gains Tax (RPGT) is levied on the sale of real estate. RPGT applies to gains from the disposal of property or shares in real property companies, and the rate varies depending on the length of ownership.
| Date of Disposal | Companies Name | Individuals (Citizen & PR) | Individuals (Non-citizen) |
|---|---|---|---|
| Within 3 years from the date of acquisition | 30% | 30% | 30% |
| In the 4th year | 20% | 20% | 30% |
| In the 5th year | 15% | 15% | 30% |
| 6th year onwards | 15% | 10% | 10% |
RPGT is an important consideration for investors planning to sell property within a short time after purchase.
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3. Property Assessment (Cukai Harta)
Properties within local authority boundaries are subject to Property Assessment or “Cukai Harta.” This tax, calculated based on annual rental value, helps finance public infrastructure and facilities within the locality.
Each local authority sets its own rates, which depend on the type and location of the property. Property owners should budget for this recurring tax to ensure compliance with local regulations.
4. Quit Rent (Cukai Tanah)
Quit Rent, or “Cukai Tanah,” is an annual tax levied on landowners, regardless of whether the land is freehold or leasehold. This tax is payable to the state government and also applies to strata-titled properties like apartments and condominiums.
Rates for Quit Rent vary by state and, in some cases, even within different districts of the same state. Property owners should check local requirements to stay compliant.
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5. Personal Income Tax on Rental Income
Rental income from real estate is taxable under Malaysia’s Income Tax Act 1967, specifically paragraph 4(a) (business income) or 4(d) (rental income).
- Business Income: Rental income is deemed business income if services like maintenance are actively provided to tenants.
- Rental Income: If the property is rented without these additional services, the income is treated as non-business income.
Understanding the classification of rental income can help property owners accurately calculate their tax obligations.
Conclusion
Navigating the taxes on real estate in Malaysia is crucial for property investors and owners. From Stamp Duty and RPGT to Quit Rent and Property Assessment, being aware of these taxes can help you budget effectively and comply with Malaysian tax laws. My Industrial Specialist is here to assist with any questions and provide guidance on your real estate journey. Reach out to us for a thorough consultation on your investment plans.
