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Everything you need to know before buying real estate is included in our Malaysia Property Pack
Property taxes in Malaysia can significantly impact your investment returns and overall ownership costs in 2025. From annual quit rent to Real Property Gains Tax, understanding these obligations is crucial for making informed real estate decisions.
As we reach mid-2025, Malaysian property owners face multiple tax categories including state-levied quit rent, municipal assessment taxes, transaction-based stamp duties, and capital gains taxes that vary dramatically based on holding periods and residency status. Whether you're a first-time homebuyer or seasoned investor, knowing these exact rates and structures will help you budget accurately and maximize your property investment strategy.
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.
Malaysian property owners in 2025 pay quit rent starting from RM0.03 per square foot annually, assessment tax at approximately 6% of annual rental value, and stamp duty ranging from 1% to 4% based on property value.
Real Property Gains Tax varies from 0% to 30% depending on holding period and residency status, while rental income is taxed at progressive rates from 0% to 30% for residents and a flat 30% for non-residents.
| Tax Type | Rate/Amount | Who Pays |
|---|---|---|
| Quit Rent | RM0.03-RM0.05/sq ft annually | Property Owner |
| Assessment Tax | ~6% of annual rental value | Property Owner |
| Stamp Duty | 1%-4% (tiered by value) | Property Buyer |
| RPGT (Malaysians) | 0%-30% (by holding period) | Property Seller |
| RPGT (Foreigners) | 10%-30% (by holding period) | Property Seller |
| Legal Fees | 0.5%-1% (tiered) | Buyer/Seller |
| Rental Income Tax | 0%-30% progressive | Property Owner |
What are the different types of property taxes a homeowner or investor needs to pay in Malaysia in 2025?
Malaysian property owners face seven main categories of taxes and charges when owning real estate in 2025.
The primary ongoing taxes include quit rent (cukai tanah) collected by state governments and assessment tax (cukai taksiran) levied by local councils. Transaction-based taxes comprise stamp duty on property purchases, loan agreements, and tenancy contracts, plus Real Property Gains Tax when selling properties.
Additional costs include Service Tax on certain property management services at 8%, personal income tax on rental income at progressive rates up to 30%, and various transaction fees like legal fees, valuation fees, and agent commissions. Property owners also pay ongoing charges such as strata management fees for condominiums and municipal charges for services.
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How much is the annual quit rent and does it vary depending on the property type or location?
Quit rent typically ranges from RM0.03 to RM0.05 per square foot annually for residential properties in Malaysia as of June 2025.
The exact rate varies significantly by state, property type, and location within each state. Urban properties generally pay higher rates than rural areas, while commercial properties face substantially higher rates than residential ones. For example, a 1,800 square foot residential property at RM0.035 per square foot would pay approximately RM63 in annual quit rent.
For stratified properties like condominiums and apartments, the total quit rent for the entire development is divided among individual parcel owners based on their share units. The building's management corporation typically collects this amount from individual owners along with monthly maintenance fees, making the payment process more streamlined for condo owners.
What is the assessment tax, how is it calculated, and how often is it paid?
Assessment tax is calculated based on the property's estimated annual rental value multiplied by a rate set by the local council.
Local authorities estimate what your property could rent for annually, then apply a rate of approximately 6% for residential properties and 2% to 9% for commercial and industrial properties. This tax funds municipal services like waste collection, street lighting, and local infrastructure maintenance.
Property owners receive assessment tax bills twice yearly (biannually) from their local council. The exact timing varies by municipality, but most councils issue bills in January and July. Payment deadlines typically allow 30 to 60 days from the bill date, with late payment penalties applied for overdue amounts.
Is there a stamp duty when purchasing a property, and how is the rate structured based on the property price?
Stamp duty applies to all property purchases in Malaysia with a tiered structure that increases with property value.
| Property Value Range | Rate for Malaysians/PRs | Rate for Foreign Companies |
|---|---|---|
| First RM100,000 | 1% | 4% (flat rate) |
| Next RM400,000 (RM100,001-RM500,000) | 2% | 4% (flat rate) |
| Next RM500,000 (RM500,001-RM1,000,000) | 3% | 4% (flat rate) |
| Above RM1,000,000 | 4% | 4% (flat rate) |
| Loan Agreement Stamp Duty | 0.5% of loan amount | 0.5% of loan amount |
| Tenancy Agreement | Based on annual rent | Based on annual rent |
First-time homebuyers enjoy significant exemptions until the end of 2025: full stamp duty exemption for properties up to RM500,000 and 75% exemption for properties valued between RM500,001 and RM1 million. These exemptions can save thousands of ringgit for eligible buyers.
What are the current Real Property Gains Tax rates for Malaysians, permanent residents, and foreigners in 2025?
RPGT rates in 2025 create a clear incentive structure favoring longer property holding periods, with dramatic differences between Malaysians and foreigners.
Malaysians and permanent residents pay 30% RPGT for properties sold within the first three years, dropping to 20% in the fourth year, 15% in the fifth year, and 0% from the sixth year onwards. This structure encourages long-term property investment and homeownership among locals.
Foreigners and companies face higher rates: 30% for properties held up to five years, then 10% permanently for properties held six years or longer. This policy generates ongoing revenue from foreign property investments while still providing some incentive for longer-term holding periods.
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How does the RPGT rate change depending on how many years you've held the property before selling?
The RPGT holding period structure creates substantial tax savings for patient investors, particularly Malaysian citizens and permanent residents.
For Malaysians and PRs, the most significant rate drop occurs after five years of ownership, when the tax falls from 15% to 0%. This six-year threshold represents the sweet spot for tax-free capital gains, making it an important milestone for investment planning. Properties sold in years four and five still face meaningful taxes at 20% and 15% respectively.
Foreign investors and companies never reach 0% RPGT rates, instead paying a minimum 10% from the sixth year onwards. This permanent 10% floor means foreign investors should factor this ongoing tax cost into their long-term return calculations, even for properties held for decades.
The structure also includes exemptions: Malaysians can claim a once-in-a-lifetime exemption when selling their private residence, while family transfers between spouses, parents and children, or grandparents and grandchildren are completely exempt from RPGT regardless of holding period.
What are the typical legal fees, valuation fees, and agent commissions involved in property transactions in Malaysia?
Legal fees follow a regulated tiered structure similar to stamp duty, ensuring consistent pricing across the country.
| Property Price Range | Legal Fee Rate | Example Fee Amount |
|---|---|---|
| First RM500,000 | 1% | RM5,000 on RM500,000 |
| Next RM500,000 | 0.8% | RM4,000 on next RM500,000 |
| Next RM2,000,000 | 0.7% | RM14,000 on next RM2,000,000 |
| Next RM2,000,000 | 0.6% | RM12,000 on next RM2,000,000 |
| Above RM5,000,000 | 0.5% | Variable based on amount |
Valuation fees typically range from 0.25% to 0.5% of the property value, depending on the property type, location, and complexity of the valuation. Banks require professional valuations for mortgage approvals, adding this cost to the purchase process.
Real estate agent commissions can reach up to 3% of the transaction price, plus 6% Service and Sales Tax where applicable. The seller typically pays the agent commission, though this can be negotiated as part of the overall transaction terms.
Is there any service tax or GST/SST on property management or rental income services?
Service and Sales Tax at 8% applies to specific property-related services starting July 1, 2025, but excludes residential rental income for individuals.
The SST expansion covers rental and leasing services for commercial properties, property management services, and related professional services. However, individuals renting out residential properties for personal accommodation purposes remain exempt from charging SST to their tenants.
Micro, small, and medium enterprises with annual turnover below RM500,000 are exempt from SST registration requirements. Property management companies and commercial landlords above this threshold must register for SST and charge the 8% rate on applicable services, affecting the overall cost structure for commercial property investments.
What kind of taxes apply to rental income in Malaysia and what are the current personal income tax rates relevant to it?
Rental income is treated as regular income and taxed at progressive personal income tax rates ranging from 0% to 30% for Malaysian residents in 2025.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Malaysia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
The progressive tax structure for residents starts with RM5,000 tax-free threshold, then 1% on income from RM5,001 to RM20,000, increasing gradually to 30% on income above RM2 million. Most property investors fall into the 11% to 28% brackets, depending on their total annual income including rental receipts.
Non-residents face a flat 30% tax rate on all Malaysian-sourced income, including rental income, making residential status a crucial factor in investment returns. Property owners can deduct legitimate expenses such as mortgage interest, maintenance costs, property management fees, and insurance premiums from their rental income before calculating taxable amounts.
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Are there any exemptions or tax reliefs for first-time homebuyers or certain property types in 2025?
First-time homebuyers in Malaysia receive substantial tax incentives that can save thousands of ringgit in 2025.
Stamp duty exemptions provide the most immediate savings: 100% exemption for properties up to RM500,000 and 75% exemption for properties valued between RM500,001 and RM1 million. These exemptions remain available through the end of 2025, making this year particularly attractive for first-time buyers.
Income tax relief offers additional long-term benefits with up to RM7,000 annual relief for properties costing RM500,000 or less, and up to RM5,000 annual relief for properties between RM500,001 and RM750,000. This relief can be claimed for three consecutive years from 2025 to 2027, providing ongoing tax savings.
The RPGT exemption allows Malaysians to claim a once-in-a-lifetime exemption when selling their private residence, regardless of holding period. This exemption particularly benefits homeowners who need to sell and upgrade their primary residence without facing capital gains taxes.
Do foreigners pay additional property taxes or have restrictions when buying property in Malaysia?
Foreigners do not pay additional annual property taxes compared to Malaysian citizens, but face higher transaction costs and ownership restrictions.
The main financial difference lies in RPGT rates, where foreigners pay 30% for properties held up to five years and 10% permanently thereafter, while Malaysians pay 0% from the sixth year onwards. Foreign companies also pay a flat 4% stamp duty rate regardless of property value, compared to the tiered 1% to 4% structure for locals.
Ownership restrictions vary by state but typically include minimum property price thresholds starting from RM1 million in most states, with some areas requiring even higher minimums. Certain property types like low-cost housing are completely restricted from foreign ownership, while some states limit foreign ownership percentages in specific developments.
These restrictions aim to balance foreign investment attraction with local housing affordability, creating opportunities for high-value property investments while protecting the affordable housing segment for Malaysian citizens.
Are there any municipal charges, strata management fees, or other hidden costs that can affect overall property tax planning?
Property ownership in Malaysia involves several ongoing costs beyond the main taxes that can significantly impact investment returns.
Strata management fees for condominiums and apartments typically range from RM0.30 to RM0.80 per square foot monthly, depending on facilities and services provided. A 1,000 square foot condo might incur RM300 to RM800 monthly in management fees, adding RM3,600 to RM9,600 annually to ownership costs.
The sinking fund represents an additional 10% of monthly maintenance fees, creating a reserve for major repairs and replacements. This mandatory contribution ensures building maintenance standards but adds to ongoing costs that property investors must factor into their cash flow calculations.
Other potential costs include utility deposits when setting up services, property insurance premiums, renovation permits for modifications, and late payment penalties for overdue tax payments. These seemingly minor costs can accumulate to thousands of ringgit annually, making comprehensive budgeting essential for property investment success.
Conclusion
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.
Understanding Malaysia's property tax landscape in 2025 requires careful consideration of multiple components that vary by residency status, property type, and holding periods.
The key to successful property investment lies in comprehensive planning that accounts for all taxes, fees, and ongoing costs while maximizing available exemptions and incentives for your specific situation.
Sources
- Property Genie Malaysia - Property Taxes Guide
- DWG Malaysia - Types of Property Taxes
- Official MM2H - Property Taxes in Malaysia
- My Property Places - Quit Rent Guide
- iProperty Malaysia - Quit Rent and Assessment Guide
- ClearTax Malaysia - Stamp Duty Guide
- Inland Revenue Board Malaysia - RPGT Rates
- IQI Global - RPGT Insights
- PwC Malaysia - Tax Updates 2025
- RinggitPlus - Personal Income Tax Guide 2025