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Malaysia's property tax system in 2025 involves multiple authorities and stages, from stamp duties when buying to ongoing ownership taxes and capital gains upon selling.
Understanding these taxes is crucial for property investors and homeowners, as non-compliance can result in penalties, legal action, and property seizure. Each tax serves different purposes, from validating legal documents to funding local infrastructure and curbing property speculation.
If you want to go deeper, you can check our pack of documents related to the real estate market in Malaysia, based on reliable facts and data, not opinions or rumors.
Property taxes in Malaysia span four distinct phases: purchase (stamp duties on transfer and loan documents), ownership (annual assessment tax and quit rent), rental income (progressive tax rates up to 30%), and sale (Real Property Gains Tax based on holding period).
The 2025 tax structure differentiates between Malaysian citizens, permanent residents, and foreigners, with specific rates, exemptions, and minimum thresholds applying to each category.
| Tax Category | Authority | Key Rates 2025 |
|---|---|---|
| Stamp Duty (Transfer) | Inland Revenue Board (LHDN) | 1-4% for Malaysians/PRs, 4% flat for foreigners |
| Stamp Duty (Loan) | Inland Revenue Board (LHDN) | 0.5% of loan amount |
| Assessment Tax | Local Council | 4-7% of annual rental value |
| Quit Rent | State Land Office | RM0.035-1.00 per square foot |
| Rental Income Tax | Inland Revenue Board (LHDN) | 0-30% progressive (residents), 30% flat (non-residents) |
| Real Property Gains Tax | Inland Revenue Board (LHDN) | 0-30% based on holding period and seller type |
What are all the taxes and duties involved at each stage—buying, owning, renting out, and selling property in Malaysia in 2025—and which authority collects each one?
Malaysia's property tax system in 2025 operates across four distinct phases, with each authority collecting specific taxes to serve different purposes.
Buying Stage: The Inland Revenue Board (LHDN) collects stamp duty on the Memorandum of Transfer or Sale and Purchase Agreement at rates ranging from 1-4% for Malaysian citizens and permanent residents, while foreigners pay a flat 4% rate. LHDN also collects stamp duty on loan agreements at 0.5% of the approved loan amount.
Owning Stage: Local councils collect assessment tax (cukai taksiran) at 4-7% of the property's annual rental value to fund municipal services like waste collection and road maintenance. State Land Offices collect quit rent (cukai tanah) based on land area, typically ranging from RM0.035 to RM1.00 per square foot annually for landed properties, or by share units for strata properties.
Renting Out Stage: LHDN collects rental income tax through annual tax returns, with Malaysian residents paying progressive rates from 0-30% and non-residents paying a flat 30% rate. Tenants pay stamp duty on tenancy agreements to LHDN, calculated at RM1-7 per RM250 of annual rent depending on lease duration.
Selling Stage: LHDN collects Real Property Gains Tax (RPGT) on disposal profits, with rates varying from 0-30% based on the seller's citizenship status and property holding period, plus legal fees to private lawyers.
What are the exact 2025 stamp duty brackets and rates for the transfer of property (MOT/SPA) and for the loan agreement, including any fixed caps or tiered slabs?
Malaysia's 2025 stamp duty structure operates on tiered brackets for property transfers, with different rates for Malaysian citizens/permanent residents versus foreigners.
Property Transfer Stamp Duty (MOT/SPA): For Malaysian citizens and permanent residents, the first RM100,000 is taxed at 1%, the next RM400,000 (RM100,001-RM500,000) at 2%, the next RM500,000 (RM500,001-RM1,000,000) at 3%, and amounts exceeding RM1,000,000 at 4%. Foreigners and foreign companies pay a flat 4% rate on the entire property value regardless of amount.
Loan Agreement Stamp Duty: A fixed rate of 0.5% applies to the entire approved loan amount with no tiered slabs or caps. This rate applies uniformly to all borrowers regardless of citizenship status.
First-Home Incentives: Malaysian citizens and permanent residents purchasing their first property valued at RM500,000 or below enjoy complete stamp duty exemption on both transfer and loan agreements through December 31, 2025. No exemptions apply to properties above RM500,000 as of 2024.
The self-assessment system introduced in 2025 requires accurate calculation and timely payment within 30 days of document execution to avoid penalties starting at 5% of the duty amount.
Can you show worked stamp duty examples for purchases at RM300,000, RM600,000, RM1,000,000, and RM2,000,000, both with and without first-home or affordable-housing incentives?
| Purchase Price | Standard Stamp Duty Calculation | First-Home Exemption |
|---|---|---|
| RM300,000 | First RM100,000 Ă— 1% = RM1,000 Next RM200,000 Ă— 2% = RM4,000 Total: RM5,000 |
RM0 (Full exemption) |
| RM600,000 | First RM100,000 Ă— 1% = RM1,000 Next RM400,000 Ă— 2% = RM8,000 Next RM100,000 Ă— 3% = RM3,000 Total: RM12,000 |
RM12,000 (No exemption above RM500k) |
| RM1,000,000 | First RM100,000 Ă— 1% = RM1,000 Next RM400,000 Ă— 2% = RM8,000 Next RM500,000 Ă— 3% = RM15,000 Total: RM24,000 |
RM24,000 (No exemption above RM500k) |
| RM2,000,000 | First RM100,000 Ă— 1% = RM1,000 Next RM400,000 Ă— 2% = RM8,000 Next RM500,000 Ă— 3% = RM15,000 Next RM1,000,000 Ă— 4% = RM40,000 Total: RM64,000 |
RM64,000 (No exemption above RM500k) |
| Loan Duty (0.5%) | RM300k loan: RM1,500 RM600k loan: RM3,000 RM1m loan: RM5,000 RM2m loan: RM10,000 |
Same exemption applies for first-home buyers on properties ≤RM500k |
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What stamp duty applies to tenancy agreements in 2025 and how much would it be for monthly rents of RM1,500, RM2,500, and RM5,000 on 1-year and 3-year terms?
Tenancy agreement stamp duty in Malaysia 2025 follows a formula based on total annual rent divided by RM250 units, with rates varying by lease duration.
Calculation Method: Annual rent Ă· RM250 (rounded up to next whole number) Ă— applicable rate + RM10 for tenant's copy. One-year leases are charged RM1 per unit, while leases exceeding one year up to three years are charged RM3 per unit.
| Monthly Rent | 1-Year Term Duty | 3-Year Term Duty |
|---|---|---|
| RM1,500 | RM18,000 Ă· 250 = 72 units 72 Ă— RM1 + RM10 = RM82 |
RM54,000 Ă· 250 = 216 units 216 Ă— RM3 + RM10 = RM658 |
| RM2,500 | RM30,000 Ă· 250 = 120 units 120 Ă— RM1 + RM10 = RM130 |
RM90,000 Ă· 250 = 360 units 360 Ă— RM3 + RM10 = RM1,090 |
| RM5,000 | RM60,000 Ă· 250 = 240 units 240 Ă— RM1 + RM10 = RM250 |
RM180,000 Ă· 250 = 720 units 720 Ă— RM3 + RM10 = RM2,170 |
The RM2,400 annual rent exemption threshold was abolished effective January 1, 2025, making all tenancy agreements subject to stamp duty regardless of rental amount. Tenants bear responsibility for paying this duty, not landlords.
What are the annual "owning" taxes—local council assessment (cukai taksiran) and quit rent (cukai tanah)—and how are they calculated, with example bills for a RM500,000 condo and a RM1,200,000 landed home?
Malaysia's annual property ownership taxes comprise two distinct levies collected by different authorities to fund various public services and land administration.
Assessment Tax (Cukai Taksiran): Local councils impose this tax at 4-7% of the property's estimated annual rental value to fund municipal services including waste collection, street lighting, and park maintenance. The annual rental value represents the estimated gross rent achievable if the property were leased.
Quit Rent (Cukai Tanah): State Land Offices collect this land tax based on property size and type. Landed properties typically pay RM0.35-1.00 per square foot annually, while strata properties pay based on share units or a fixed rate per unit.
RM500,000 Condominium Example: Assuming annual rental value of RM24,000 (RM2,000/month), assessment tax at 5% equals RM1,200 annually. Quit rent for a 1,000 square foot unit at RM0.15 per square foot equals RM150 annually.
RM1,200,000 Landed Home Example: Assuming annual rental value of RM48,000 (RM4,000/month), assessment tax at 5% equals RM2,400 annually. Quit rent for a 2,400 square foot property at RM0.50 per square foot equals RM1,200 annually.
Payment schedules vary by state, with most councils offering bi-annual payment options and early-payment discounts ranging from 10-50% for prompt settlement.
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How is rental income taxed in 2025 for residents versus non-residents and companies, with example tax amounts for net rental of RM24,000, RM60,000, and RM120,000 a year?
Malaysia's rental income taxation in 2025 varies significantly based on the taxpayer's residency status and entity type, with different rates, deductions, and reliefs available.
Malaysian Residents: Net rental income is taxed as part of total income using progressive rates from 0-30%. Allowable deductions include property management fees, repairs, insurance premiums, quit rent, assessment tax, and agent commissions. Standard personal reliefs apply if qualifying.
Non-Residents: A flat 30% tax rate applies to net rental income with no personal reliefs, exemptions, or rebates available. The same allowable deductions apply for calculating net rental income.
Companies: Corporate tax rate of 24% applies to net rental income in 2025, with similar allowable deductions as individuals but no personal reliefs.
| Net Rental Income | Resident Individual Tax | Non-Resident Tax (30%) | Corporate Tax (24%) |
|---|---|---|---|
| RM24,000 | RM1,440 (6% tax bracket) | RM7,200 | RM5,760 |
| RM60,000 | RM6,750 (progressive bands) | RM18,000 | RM14,400 |
| RM120,000 | RM19,900 (progressive bands) | RM36,000 | RM28,800 |
Rental income is assessed on a receipt basis, meaning tax applies in the year rent is actually received rather than when it becomes due.
What are the Real Property Gains Tax (RPGT) rates in 2025 by holding period band for individuals and companies, and which costs can reduce the chargeable gain?
Malaysia's RPGT rates in 2025 operate on a sliding scale based on property holding period and seller category, designed to discourage short-term speculation while encouraging long-term investment.
| Seller Category | Year 1-2 | Year 3-5 | Year 6+ |
|---|---|---|---|
| Malaysian Citizens/PRs | 30% | 30% (Yr 3-4), 15% (Yr 5) | 0% |
| Non-Residents/Foreigners | 30% | 30% | 10% |
| Companies | 30% | 30% (Yr 3-4), 15% (Yr 5) | 10% |
Allowable Deductions to Reduce Chargeable Gain: Legal fees for both purchase and sale, real estate agent commissions, stamp duties paid, loan interest and related financing costs, property renovation and improvement costs (with receipts), valuation fees, and advertising expenses for the sale.
Special Exemptions: Malaysian citizens and permanent residents receive a once-in-a-lifetime exemption of RM10,000 or 10% of chargeable gain (whichever is higher) for disposal of private residence. Properties sold at a loss generate allowable losses that can offset future property gains within the same tax year.
The holding period calculation begins from the date of the original Sale and Purchase Agreement to the disposal date, with the self-assessment system requiring submission within 60 days of sale completion.
Can you show RPGT calculations on profits of RM50,000, RM150,000, and RM400,000 when selling in year 1, year 3, year 5, and after year 6?
| Chargeable Gain | Year 1 (30%) | Year 3 (30%) | Year 5 (15%*) | Year 6+ (0%*/10%**) |
|---|---|---|---|---|
| RM50,000 | RM15,000 | RM15,000 | RM7,500* | RM0* / RM5,000** |
| RM150,000 | RM45,000 | RM45,000 | RM22,500* | RM0* / RM15,000** |
| RM400,000 | RM120,000 | RM120,000 | RM60,000* | RM0* / RM40,000** |
*Rates for Malaysian citizens and permanent residents
**Rates for non-residents and companies
Calculation Example for RM150,000 Gain: A Malaysian citizen selling after 3 years pays RM45,000 RPGT (RM150,000 Ă— 30%). The same person selling after 6 years pays RM0 due to the exemption. A non-resident selling after 6 years pays RM15,000 (RM150,000 Ă— 10%).
Additional Considerations: The RM10,000 or 10% exemption available to Malaysian citizens can further reduce the tax liability. For the RM150,000 example, a Malaysian citizen could potentially reduce the gain by RM15,000 (10% of RM150,000), lowering the taxable amount to RM135,000.
Companies follow the same rate structure as Malaysian citizens for years 1-5 but pay 10% tax from year 6 onwards, unlike the 0% rate for individual Malaysian citizens and permanent residents.
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Do rates or rules differ by property type and land title, and what do example assessment/quit-rent numbers look like for each?
Malaysia's property tax structure varies significantly based on property classification and land title type, reflecting different usage patterns and infrastructure requirements.
Property Type Variations: Residential properties typically face assessment tax rates of 4-7% of annual rental value. Commercial properties incur higher rates of 8-12% due to greater infrastructure usage and business profit generation. Industrial properties face similar commercial rates, while agricultural land receives preferential treatment with rates as low as 2-4% of annual value.
Land Title Differences: Freehold properties generally have higher quit rent rates than leasehold properties. Strata titles (condominiums, apartments) pay quit rent based on share units or fixed amounts per unit, typically RM0.10-0.20 per square foot annually. Landed titles pay based on actual land area at RM0.35-1.00 per square foot depending on location and development status.
| Property Type | Assessment Rate | Example Annual Bills (RM500k Value) |
|---|---|---|
| Residential Landed | 5-6% | Assessment: RM1,500, Quit rent: RM1,200 |
| Residential Strata | 5-6% | Assessment: RM1,200, Quit rent: RM150 |
| Commercial | 10-12% | Assessment: RM3,000, Quit rent: RM800 |
| Industrial | 8-10% | Assessment: RM2,400, Quit rent: RM600 |
| Agricultural | 3-4% | Assessment: RM800, Quit rent: RM300 |
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What varies by state or local council in 2025, and can you give typical ranges plus example annual bills for the same RM500,000 condo in each major state?
Malaysian property taxes vary significantly across states and local councils due to different development costs, infrastructure needs, and local government policies.
Assessment Tax Variations: Kuala Lumpur and Selangor typically impose higher rates (5-7%) due to extensive infrastructure and services. Penang follows similar patterns for developed areas. Johor offers competitive rates (4-6%) to attract investment, while Sabah and Sarawak generally have lower rates (3-5%) reflecting lower development costs.
Quit Rent Differences: Each state sets its own quit rent structure. Peninsular Malaysia states typically charge RM0.035-0.50 per square foot for strata properties, while East Malaysia states may have different calculation methods and rates.
| State/Council | Assessment Tax | Quit Rent | Total Annual Cost |
|---|---|---|---|
| Kuala Lumpur | RM1,200 (5%) | RM75 | RM1,275 |
| Selangor | RM1,300 (5.5%) | RM90 | RM1,390 |
| Penang | RM1,000 (4.5%) | RM80 | RM1,080 |
| Johor | RM1,500 (6%) | RM120 | RM1,620 |
| Sabah | RM800 (3.5%) | RM60 | RM860 |
| Sarawak | RM1,100 (4.5%) | RM100 | RM1,200 |
Additional state-specific levies may apply. Penang imposes a 3% levy on foreign property purchases, Johor charges 2%, and Melaka also implements a 2% levy, adding significant costs for foreign investors beyond standard taxes.
Are there special rules, thresholds, or surcharges for foreigners, PRs, companies, and REITs in 2025, with numeric examples?
Malaysia's 2025 property tax system implements distinct rules and thresholds for different buyer categories to regulate foreign investment while encouraging local ownership.
Foreigner Restrictions: Minimum property purchase thresholds range from RM1-3 million depending on state and local policies. Most states enforce RM1 million minimum, with exceptions for specific developments or economic zones. Foreigners pay flat 4% stamp duty on property transfers regardless of value, compared to the tiered 1-4% structure for locals.
RPGT Rate Differences: Foreigners and non-residents pay 10% RPGT on property sales after year 6, while Malaysian citizens and permanent residents pay 0%. This creates significant long-term cost differences for investment properties.
State-Specific Levies: Additional foreign buyer levies apply in certain states - Penang (3%), Johor (2%), and Melaka (2%) - calculated on the full purchase price and paid directly to state governments.
| Buyer Category | Min. Purchase | Stamp Duty | RPGT (Year 6+) | Additional Levies |
|---|---|---|---|---|
| Malaysian/PR | No minimum | 1-4% tiered | 0% | None |
| Foreigner | RM1-3 million | 4% flat | 10% | Up to 3% |
| Companies | Varies by state | 4% if foreign | 10% | If foreign-owned |
| REITs | Special rules | Corporate rate | 24% corp rate | Structure dependent |
Numeric Example: A foreigner buying a RM2 million Penang property pays RM80,000 stamp duty (4%), RM60,000 state levy (3%), plus standard legal and other fees, totaling approximately RM160,000 in government charges compared to RM64,000 stamp duty for a Malaysian buyer.
What are the filing steps, deadlines, and penalties for each tax, and how much do late-payment penalties add as a percentage and in ringgit?
Malaysia's property tax compliance in 2025 requires adherence to specific deadlines and procedures across multiple authorities, with significant penalties for non-compliance.
Stamp Duty Filing: Payment must occur within 30 days of document execution (if signed in Malaysia) or within 30 days of receipt (if signed overseas). Late payment incurs penalties starting at 5% of duty amount, with potential criminal liability for severely delayed payments. Unstamped documents become inadmissible in court proceedings.
Assessment Tax and Quit Rent: Annual notices are issued by local councils and land offices respectively, typically due in two installments. Payment deadlines vary by state but commonly fall in January-February and July-August. Late payment penalties range from 10-15% of outstanding amounts, with additional interest charges accruing monthly.
Rental Income Tax: Individual residents file Form BE by April 30 (manual) or May 15 (e-filing) annually. Non-residents use Form M with the same deadlines. Business income requires Form B filing by June 30 (manual) or July 15 (e-filing). Late filing penalties reach up to 10% of tax due plus additional charges for non-compliance.
1. **RPGT Filing (Self-Assessment System 2025):** Property sellers must submit CKHT forms within 60 days of disposal date2. **Payment deadline:** 90 days from disposal for final settlement3. **Required documentation:** Receipts, invoices, and supporting documents retained for 7 years4. **Late penalties:** Up to 10% of RPGT due plus interest charges5. **Criminal liability:** Possible for willful default or fraudulent declarationsIt's something we develop in our Malaysia property pack.
Penalty Examples: RM10,000 stamp duty paid 60 days late incurs RM500 penalty (5%). RM2,400 assessment tax paid 90 days late may incur RM360 penalty (15%) plus monthly interest. RPGT of RM50,000 paid 30 days late could incur RM5,000 penalty (10%) plus compounding interest charges.
Conclusion
Malaysia's comprehensive property tax system in 2025 spans multiple stages and authorities, requiring careful navigation for successful compliance and investment planning.
Understanding the distinction between Malaysian citizens, permanent residents, and foreigners is crucial, as tax rates, exemptions, and minimum purchase requirements vary significantly across these categories. The recent introduction of self-assessment systems for RPGT and enhanced digital filing requirements underscores the importance of maintaining accurate records and meeting strict deadlines.
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Property investors should budget approximately 6-8% of purchase price for initial taxes and fees, plus 1-2% annually for ongoing ownership taxes.
The significant RPGT savings available to Malaysian citizens and permanent residents after year 6 (0% vs 10% for foreigners) make holding period a critical factor in investment strategy formulation.
Sources
- ClearTax - Stamp Duty in Malaysia: Rates, Exemptions and Penalties
- Jenny Wong - Stamp Duty Malaysia Increased in 2025
- Inland Revenue Board Malaysia - RPGT Rates
- TaxPod - Malaysia Rental Income Tax Guide 2025
- PropertyGuru - Guide to Quit Rent and Assessment Rates
- iProperty - Quit Rent, Parcel Rent and Assessment Rates
- Apricity Group - Stamp Duty Increase in 2025
- Emerhub - Real Property Gain Tax in Malaysia Guide