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What is Rental Income Tax

Rental Income applies to both residential and commercial properties, and even certain machinery and ships, which also known as movable properties.

A rental income tax will be imposed upon profit that makes from renting out properties. Rental income is valued on a net basis, which reduced with certain deductible expenses, and it is taxed on a progressive tax rate from 0% to 28%.

Deductible expenses from Rental Income

  • Assessment (Cukai Pintu)
  • Quit rent (Cukai Tanah)
  • Housing loan interest
  • Fire insurance premium
  • Expenses incurred on rent collection
  • Expenses incurred on rent renewal
  • Expenses on repairs and property maintenance

However, some rental income expenses are not deductible as it is initial expenses.

E.g.: Costs to advertise the property, Legal costs in preparing the rental agreement, Stamp duty, property agent commission,etc.

RENTAL Income vs BUSINESS Income

Special deduction for rental income have been granted by the Government, If you’re renting a property out commercially.

As announced under the PERMAI Stimulus Package 2021, landlords who provide a rental reduction of at least 30% on the existing rental rate to their SME tenants from period April 2020 to June 2021 are allowed to claim a special deduction equivalent to the rental reduction.