It was proposed in Budget 2018, which was tabled in parliament on 27 October 2017:
i. 50% tax exemption will be granted on rental income not exceeding RM2000 a month on
residential homes, received by resident individuals;
ii. The exemption would be effective for 3 years, from 2018 to 2020.
The intention of this proposal is to promote affordable housing and to strengthen the housing market.
In relation to this proposal, the exemption order “Income Tax (Exemption) (No. 2) Order 2019" was subsequently approved and gazetted on 27 February 2019.
According to the exemption order, 50% of a person’s statutory income derived from the rental of residential property during the year of assessment 2018 [only] shall be exempted from tax, subject to the following conditions:
a. The landlord shall be an individual citizen who resides in Malaysia and is the registered owner of the residential property;
b. The monthly rental received from each residential property does not exceed RM2000;
c. The tenancy agreement between the landlord and the tenant which has been executed and stamped comes into effect on or after 1 Jan 2018; and
d. The residential property is rented out for any period from 1 Jan 2018 until 31 Dec 2018.
a. The exemption requires all 4 conditions to be met.
b. The tax exemption is only for 1 year covering the Year of Assessment 2018, not 3 years as originally proposed.
c. Only individual citizens of Malaysia, who reside in Malaysia would be entitled to this exemption.
d. For jointly owned property, the exemption income would be apportioned according to the ownership percentage of each owner.
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Every effort has been made to provide accurate information. However, the information
and regulations contained in this article are subject to changes and amendments by the
relevant authority at any time. As such, the information in this article may not be current.
And the information provided in this article is general commentary only and shall not be
considered as advice or recommendation. As all tax situations are specific to their facts and
will differ from the situations in this article - if you have specific tax questions you should
consult a licensed tax agent.