TAX EXEMPTION ON RENTAL INCOME FROM RESIDENTIAL HOMES RECEIVED BY MALAYSIAN RESIDENT INDIVIDUALS

Current position

Pursuant to section 4(d) of the Income Tax Act 1967, Malaysian individuals who lease out their residential homes must pay a progressive income tax ranging from 0%-28%.

Proposal

The Supply Bill (Budget) 2018 proposed a 50% tax exemption to be given on rental income received by Malaysian resident individuals if:

1. The rental income is less than RM2,000 per month for each residential home;
2. The residential home is rented under a legal tenancy agreement between the owner and the tenant, AND
3. Tax exemption is given for a maximum period of 3 consecutive years of assessment.

This proposal will be effective from 2018-2020.