Property tax rate for foreigners in Malaysia

All residential properties are taxed in Malaysia.

There are two types of property taxes payable on properties, Assessment Tax and Quit Rent. In most cases, you have to pay both on your property.  

Assessment tax on Malaysia property

You need to pay assessment tax to the local or municipal government. It is based on the total annual rental value of the property, assessed by the local/municipal government.

You have to pay a fee of 4% to 6% (based on the state) on the annual rental value of their property, twice a year.

Quit Rent on Malaysia property

This tax Is applied to all properties including farming land and homes. It is based on the total area covered by the property.

The rate is between 1% to 2% per square foot (based on the size and location of the property).

With holding taxes on Malaysia property

You need to pay a withholding tax of 10% on your rental income.

Keep in mind that Malaysia also levies an income tax of 25% on rental incomes. When you file your yearly rental income and income tax, the withholding tax is deducted by the government.

Malaysia abolished its capital gains tax in 2007, but after two years, it was reintroduced with a new name.

Capital Gain taxes on Malaysia property

Capital Gains Tax is now known as Real Property Gains Tax (RPGT). The tax rate is based on the holding period. Following are the RPGT rates applicable for foreign buyers:

Ownership period up to 5 years → Tax rate is 30%
Ownership period of over 5 years → Tax rate is 5%

Stamp duty taxes on Malaysia property

In Malaysia, stamp duty is levied on when transferring titles of buildings and lands. All the documents must be stamped within the 30 days after completion of the transfers.

The stamp duty increases progressively up to 3%, for the first RM 100,000 you have to pay 1% of the price as stamp duty. For the next RM 500,000, the stamp duty is 2% and for the onward value, it is 3%.

Though, the Prime Minister of Malaysia exempted the stamp duty for first time buyers temporarily (until December 2018).

The exemption is valid for properties priced up to RM 300,000.