Rental profits from residential condos, serviced apartments or commercial spaces are taxable.
Key rules:
• Section 4(d) – Passive Rental (most foreigners): Net income after direct expenses, taxed at 30% flat rate for non‑residents. No loss carry‑forwards or capital allowances.
• Section 4(a) – Business Rental (active management, e.g. Airbnb with services): Treated as business income. Foreign companies pay 24% corporate tax; individuals still 30% but with broader deductions.
• Tax Residency: Foreigners staying <182 days/year = non‑resident (30% flat). ≥182 days = resident (0–30% progressive, eligible for reliefs).
• Net Basis: Tax only on gross rent minus allowable expenses (not gross).
Non‑residents get no personal reliefs (e.g. no spouse/child deductions), but deductions still apply.
Net Rental Income Calculation (Example)
Scenario: Foreign owner rents out KLCC condo at RM5,000/month (RM60,000/year).
Expenses: RM10,000.
| Item | Amount, RM |
| Gross Rental Income | 60,000 |
| Deductible Expenses | |
| – Quit rent & assessment tax | 2,500 |
| – Maintenance fees (Strata) | 7,000 |
| – Repairs (AC, Plumbing) | 1,500 |
| – Fire Insurance | 800 |
| – Loan Interest | 9000 |
| – Rent collection/agent fees | 700 |
| Net Rental Income | 38,500 |
| Tax at 30% (non-resident) | 11,550 |
Effective tax impact: With a proper taxes submission after deducting the allowable expenses, the actual tax amount is reduced. From the above example the net taxable amount became RM38,500 instead of RM60,000. It seems like the tax rate has became 20% in order to achieve a better yield.
20% multiply by gross rent of RM60,000 = RM12,000.
Always engage a tax consultant to do the job. You may consider contacting LK Advisory if you have no other contacts or need some recommendations.
Key Deductible Expenses for KL Condo Owners
Under Section 4(d) (passive), deductible direct expenses incurred while renting:
• Quit rent/parcel rent & assessment tax (local council charges)
• Strata maintenance fees & sinking fund
• Repairs/maintenance (e.g. fixing leaks, AC replacement, painting wear‑and‑tear)
• Fire insurance premiums
• Loan interest (not principal) on property mortgage
• Rent collection fees (agent commissions for renewals)
• Tenancy renewal costs (legal fees, stamp duty for renewals)
Pro tip: Group expenses across multiple properties—one unit’s costs offset another’s income (same year only).
Non‑deductible Expenses:
- – Initial agent fees,
– First tenancy stamp duty,
– Major renovations (capital),
– Advertising for first tenant.
Airbnb/Short Term Rentals Special Rules
• Short‑term rentals (Airbnb): Often qualify as Section 4(a) business if providing cleaning, security, etc.—broader deductions + capital allowances possible.
• e‑Invoicing (mandatory from 2026 for most):
• Individual foreigners (passive): Tenants issue self‑billed e‑invoices for rent/utilities.
• Active STR/business: You issue e‑invoices via MyInvois portal (phased by turnover).
• Tourism Tax: Platforms like Airbnb handle this (RM10/night per room).
Vacant periods: Deduct maintenance during downtime if preparing to re‑rent.
Tax Filing Deadlines & Process
• Non‑residents: File Form M by 15 May (e‑Filing) for prior year.
• Residents: Form BE (no business) by 15 May; Form B (with business) by 15 July.
• e‑Filing via MyTax portal (mandatory for most).
• Penalties: Up to double undercharged tax for non‑declaration (Section 113 ITA).
Records: Keep receipts 7 years; declare on receipt basis (rent when received).
Why This Matters for International Buyers
• Higher entry costs: From Jan 2026, foreign stamp duty up to 8% (vs 4%)—factor into total yield.
• Yield reality: After 30% tax + expenses, gross 5–6% yields become 2.5–4% net for non‑residents.
• STR appeal: Bukit Bintang/KLCC condos near MRT shine for tourists (Rapid Bulanan RM150 pass helps guests).
• Residency hack: Stay ≥182 days to access progressive rates + reliefs (e.g. up to RM9,000 personal).
Tourist angle: Short‑stay guests love “tax‑compliant” hosts—boost reviews/rates.
5 Tips for Foreign KL Condo Investors
1. Use agents/property managers—deduct fees, handle e‑invoices.
2. Track expenses religiously—look into both free and paid app.
3. Consider company structure—24% corporate vs 30% personal (consult advisor).
4. Prioritise transit spots—tenants offset RM150 Rapid Bulanan easily.
5. File early—e‑Filing avoids penalties, claim refunds if overpaid.
Malaysia remains investor‑friendly despite taxes—strong tourism + growth supports yields.
Planning a KLCC/Bukit Bintang buy? At boongiap.com.my I can recommend based on your needs. if you are interested to get a personalised tax + yield projection, I can connect you to the appropriate personnel.