Tax exemption on rental income from residential homes

Presently, rental income is subject to income tax under the Section 4 (d) of the Income Tax Act 1967. There is no exemption given on the rental income from a residential home received by a resident individual.

Based on the Budget 2018, it is proposed that an income tax exemption of 50% be given on rental income received by Malaysian resident individuals if following conditions are met:

1. The residential home must be rented out under a legal tenancy agreement between owner and tenant;

2. Rental income received does not exceed RM2,000 per month for each residential home;

This tax exemption is given for a maximum period of three (3) consecutive years of assessment.

Effective date is Years of Assessment 2018 to 2020.