Is rental income taxable in Malaysia?

Yes. Malaysian tax residents are taxed on rental profit after allowable expenses such as loan interest, maintenance fees, quit rent, assessment and insurance, at their normal income tax rate. A rental loss cannot be offset against employment income. Non-residents are taxed at 30% on gross rental income.

When does RPGT drop to zero in Malaysia?

For Malaysian citizens and permanent residents, RPGT is 30% on disposals within three years, 20% in the fourth year, 15% in the fifth year, and 0% from the sixth year onward. Foreigners pay 30% within five years and 10% from the sixth year, and never reach zero.

Malaysia · rental property

Is it worth it as an investment property?

Q: What is a good rental yield in Malaysia?

Gross yields of around 4 to 5% are common for Klang Valley condominiums. After vacancy, maintenance, quit rent, assessment and management costs, net yields are often closer to 2.5 to 3.5%, which is usually below the interest rate on a housing loan.

Quick answer: Whether a Malaysian rental property is a good investment depends on net yield, financing costs and price growth, not gross yield alone. Klang Valley condos often net 2.5% to 3.5% after vacancy and running costs — below typical loan rates — so leveraged returns usually depend on capital appreciation rather than rental income alone.

Comparing several listings first? The rental yield calculator puts three side by side. Gross yield is the number agents quote. What matters is what's left after vacancy, maintenance, loan interest and tax — and what the whole thing returns on the cash you actually put in, compared with just leaving that money somewhere else.

The property

Purchase price

Expected rent

RM/mo

Check actual listings for the same building, not the developer's projection.

Furnishing & setup

Empty months per year

months

Between tenants, and time to find the first one.

Maintenance & sinking fund

RM/mo

Quit rent, assessment & insurance

RM/yr

Repairs, agent & management

% of rent

Financing & tax

Buyer status

Housing loans you already have

A third housing loan is capped at 70% financing.

Down payment

Loan interest rate

% p.a.

Loan tenure

years

Your top income tax rate

Rent is taxed after loan interest and running costs.

The assumptions that decide it

change these first

How long you'll hold it

years

Property price growth

% /yr

Many KL condo areas have been flat for years amid oversupply.

Rent growth

% /yr

This money would otherwise be invested
Untick if it would sit in a current account or get spent — the property is then compared with simply holding cash.

Annualised return on your cash

—

Gross yield

—

the number agents quote

Net yield

—

after vacancy & running costs

Monthly cash flow

—

year one, after loan & tax

Rent to break even

—

for zero monthly cash flow

Year one, month by month

Over 10 years

What if prices don't grow as you hope?

Leverage cuts both ways. With 90% financing, most of the return comes from price growth on the whole property — so it's the assumption worth stress-testing hardest.

The honest bit

How the return is calculated

The headline figure is an internal rate of return — the single annual rate that accounts for everything: the cash you put in upfront, every month you top up or collect, and what you walk away with when you sell.

Cash in: deposit, stamp duty (8% for foreigners), legal fees on both agreements, and furnishing.
Each year: rent minus empty months, maintenance, quit rent, assessment, insurance, repairs and management, loan instalments, and income tax on the rental profit.
Rental tax: for residents, only the profit after loan interest and running costs is taxed, at your top rate. A rental loss can't reduce tax on your salary. Non-residents pay 30% on the gross rent with no deductions.
On sale: sale price minus 3% selling costs, minus RPGT — 30% within three years, 20% in year four, 15% in year five, and 0% from year six for citizens and PRs; foreigners pay 30% within five years and 10% after.

Opportunity cost is built in. Every ringgit you put in — the deposit, the fees, each monthly top-up — is also grown at the rate of whatever you'd otherwise have put it in — a fixed deposit, EPF, an index fund, or your own figure —, as if you'd invested it instead. The property is only worth it if it leaves you with more than that. A positive profit in plain ringgit can still be a loss once you account for what the money could have earned.

Negative cash flow isn't automatically a bad investment — but it is money you have to find every month, from your salary, for years. If your job or rent collection wobbles, the loan doesn't. Make sure you could carry it through six months without a tenant.

Common questions

What is a good rental yield in Malaysia?

Gross yields around 4–5% are common for Klang Valley condos, but after vacancy, maintenance and management the net figure is often closer to 2.5–3.5% — usually below the cost of a housing loan.

Is rental income taxed in Malaysia?

Yes. Residents are taxed on the profit after allowable expenses such as loan interest, maintenance, quit rent and assessment, at their normal income tax rate. Non-residents pay 30% on gross rent.

How long should I hold to avoid RPGT?

Malaysian citizens and permanent residents pay no RPGT on disposals from the sixth year after acquisition. Foreigners pay 10% from year six onward and never reach zero.

Can you get the loan in the first place?

An investment loan counts against the same DSR limit as everything else. Check your borrowing ceiling → · Deciding whether to live in it instead? Buy vs rent →