Are you a landlord in Malaysia? Did you know you might be paying thousands more in tax than necessary every year?
Rental income is taxable — but tax saving is your legal right. Under the Income Tax Act 1967, rental income is categorised into two types:
🔹 Section 4(a): Business-source rental income
If you manage your property like running a business, for example by providing comprehensive services, hiring staff, or actively maintaining the property, the rental is treated as business income. The advantage is that you can deduct expenses directly related to the business, carry forward losses to the following year, and even claim capital allowances.
🔹 Section
4(d): Non-business-source rental income
If you only collect rent passively without providing comprehensive services or active property management, the rental is treated as non-business income. In this case, you may only deduct expenses directly related to the rental income, such as loan interest, quit rent and assessment, and repair costs. However, losses cannot be carried forward to the next year.
👉 Most landlords fall under Section 4(d). That’s
why understanding which expenses are deductible is the key to reducing your taxable rental income.
