Rental Income

Rental income is defined as any amount received for the use or occupation of any real property or part thereof including premiums and other receipts in connection with the use or occupation of the real property.

Income derived from letting of real properties is taxable under paragraph 4(a) (business income) or 4(d) (rental income) of the Income Tax Act 1967.

The income is deemed as a business source if maintenance services or support services are comprehensively and actively provided concerning the real property.

According to the Inland Revenue Board Malaysia (LHDN), the following expenses can be deducted from rental income in Malaysia:

Rental income deductible expenses:

1. Assessments
2. Quit rent
3. Property loan interest
4. Fire insurance
5. Expenses on rental collection, include stamp duty
6. Repair and maintenance
7. Maintenance fee & sinking fund, indah water bill
8. Legal expenses on tenancy agreements
9. Expenses on pest control
10. Renewal property agent fees/commission

The expenses are NOT income tax deductible on initial expenses:

1. Advertising cost to get 1st tenant
2. Property agent fees or commission to obtain 1st tenant
3. Legal cost on the initial tenancy agreement
4. Expenses on renovation and improvements to get higher rental or to be more attractive

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