If you are earning a rental income from Malaysia real estate, you will need to make a final tax return.
This article explains real estate tax in Malaysia.
Malaysian real estate income taxable
Rental income obtained from real estate in Malaysia is taxable based on local tax law.
Even if you live in Japan, there is a taxation right in Malaysia, which is the location of the property by the Japan-Malaysia Tax Treaty.
Therefore, in the case of taxation to the same income in Japan, it is possible to avoid double taxation by applying “foreign tax deduction” at the time of final declaration.
Malaysia’s income tax is as follows.
•Resident: cumulative tax of 0 to 30% (with various deductions)
•Non-resident: 30% (no deduction)
Definition of Resident
If you stay in Malaysia for more than 182 days for one year from 1 January to 31 December, you will be considered as a tax resident.
*Passport entry and exit must be confirmed to prove the number of days of stay.
Income Tax Rate
For example, if you have a monthly RM5,000 (RM60,000 per year) rental income, it is common that the effective tax rate is about 10 to 16% depending on taxable income deducted from various deductions.
Deadline and Notes
Individual income tax (non-business income) declaration deadline is as follows.
•Paper declaration: April 30
•Elec: declaration: May 15
Click here for the electronic declarationhttps://ez.hasil.gov.my/）
In the case of residents, if the rental income is less than a certain amount (approximately RM 30,000), there is a case that the declaration is not necessary,
Non-residents are obliged to file income.
Due to penalty is applied for delays or undeclared, it is important to respond within the deadline.
Rent income category
In Malaysia, rent income is divided into two categories:
•Business source
•Non-business source
“Business income” if you are actively engaged in property management, cleaning, incidental services, etc.
In the case of simple rental operation (long-term business model, etc.), it is common to be treated as “non-business income”.
Differences in income calculation and taxation
As in Japan, we will deduct the necessary expenses from the rent income and calculate the income.
There is a difference between “Business Income” and “Non-Business Income”.
| Business income | Non-business income | |
| Start of income calculation | Dates to be rentable | Start date of rental contract |
| Exp s that can be deposited | All costs directly related to the occurrence of income | Specific direct expenses •Fixed assets tax (land, buildings) Fire insurance •Real Estate Agent Cost (When the lease contract is concluded, property management outsour), etc.) • Repair and repair costs •Loan interest |
| Capital Allowance | Contact Us | Not available |
| Loss | 10 years | Not allowed |
Tax rules differ depending on the type of income and the type of income.
It is important to understand correctly and make appropriate declarations.
KL Real Estate does not only introduce properties, but also provides support for post-purchase operations and tax.
If you have any questions, please feel free to contact us.
