Indian Buyers: Complete Guide to Buying Property in Malaysia (2026)

Indian nationals face the same property rules as any other foreigner in Malaysia. Nationality does not create special restrictions or special privileges. The minimum price thresholds, state consent requirements, stamp duty rates, and RPGT rates are identical whether you hold an Indian passport, a British passport, or a Singaporean passport.

Where the India-specific complexity arises is on the Indian side: FEMA regulations, LRS limits, double taxation, NRI classification, and repatriation rules. These are the constraints that shape how much you can invest, how you structure the purchase, and what your actual returns look like after tax in both countries.

This guide covers both sides — Malaysian property rules applied to Indian buyers, and Indian regulatory requirements that affect your cross-border property investment.

Same Rules as Any Foreigner

Let's be clear about what is identical for Indian buyers and all other foreigners:

There is no India-specific restriction on buying Malaysian property. Some online forums suggest Indian nationals face additional scrutiny — this is not codified in any Malaysian law. The state consent process evaluates the transaction (price, property type, location), not the buyer's nationality. You can verify whether a specific property qualifies for foreign purchase using our foreigner eligibility checker.

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India's LRS: The USD 250,000 Annual Limit

This is where Indian buyers face a constraint that most other nationalities do not.

Under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), Indian residents can remit up to USD 250,000 per financial year (April-March) for permissible capital account transactions, including purchase of immovable property abroad.

What USD 250,000 means in Malaysian ringgit:

• USD 250,000 = approximately RM1,175,000 (at USD 1 = RM 4.70)
• At RM1M (KL minimum threshold), the purchase price sits within a single year's LRS limit
• At RM1.5M, you need approximately USD 319,000 — more than one year's LRS quota
• At RM2M (Selangor minimum), you need approximately USD 426,000 — two years of LRS

Practical strategies to work within LRS:

1. Spread across financial years. If your purchase timeline allows, remit in two financial years (e.g., January-March of one year, April-June of the next). A RM1.5M purchase requiring USD 319,000 can be split into USD 250,000 + USD 69,000 across two Indian financial years.

2. Multiple family members. Each resident Indian individual has their own USD 250,000 LRS limit. A husband and wife can collectively remit USD 500,000 per year. A family of four adults: USD 1,000,000. For a RM2M Selangor purchase, a couple can fund the entire amount within one year.

3. Use Malaysian bank financing. This is the most practical strategy. If you obtain 60% financing from a Malaysian bank, your cash remittance is only 40% of the purchase price plus transaction costs. For an RM1.2M property at 60% LTV:

• Downpayment: RM480,000 (USD 102,000)
• Stamp duty (8%): RM96,000 (USD 20,400)
• Legal fees + consent: ~RM25,000 (USD 5,300)
• Total remittance needed: ~RM601,000 (USD 127,700) — well within a single year's LRS

4. NRI routing. If you are a Non-Resident Indian (NRI) with income earned outside India, LRS does not apply to that income. NRI income earned and held in foreign bank accounts can be freely deployed for Malaysian property without LRS constraints. More on NRI status below.

LRS compliance requirements:

• Form A2 (declaration of purpose) filed with your bank for each remittance
• PAN card and Aadhaar linked to your bank account
• 15CA/15CB certificates required for remittances above specified thresholds (your CA handles this)
• Bank may request supporting documents: property SPA, letter of offer, payment schedule
• TCS (Tax Collected at Source) of 20% applies on LRS remittances above INR 7 lakh — this is not a tax but an advance tax credit, adjustable against your income tax liability

Plan your remittance timeline 3-6 months before SPA signing. LRS processing through Indian banks takes 3-7 business days per transfer, and documentation requirements can cause delays. Do not wait for the SPA 14-day payment deadline to initiate your first remittance.

India-Malaysia Double Tax Avoidance Agreement (DTAA)

India and Malaysia have a DTAA (signed 1970, amended protocol 2012) that prevents double taxation on the same income. This directly affects two scenarios: rental income and capital gains from property disposal.

Rental Income

Under the DTAA:

• Malaysia has primary taxing right on rental income from Malaysian property (Article 6)
• India also taxes your worldwide income (if you are an Indian tax resident)
• But India provides relief for Malaysian tax paid — either through exemption or credit method

Practical impact:

Worked example — RM4,500/month net rental income, Indian tax resident:

• Malaysian tax (non-resident 30% flat): RM4,500 x 30% = RM1,350/month = RM16,200/year
• Indian tax on same income (assume 30% bracket): RM54,000/year = approximately INR 9.7 lakh. Indian tax at 30% = INR 2.91 lakh = approximately RM16,200
• DTAA credit: You have already paid RM16,200 to Malaysia. India gives you credit for this amount. No additional Indian tax owed.
• Net tax paid: RM16,200 (to Malaysia only)

If your Indian marginal rate is higher than 30%, you would owe the difference to India. If lower (e.g., 20% bracket), the Malaysian 30% is your total tax — you cannot claim a refund of the excess from Malaysia.

Capital Gains (RPGT)

Under Article 13 of the DTAA:

• Malaysia taxes gains from disposal of immovable property (RPGT applies)
• India also taxes overseas capital gains under the Income Tax Act
• DTAA credit applies — Indian tax reduced by RPGT already paid

Key distinction: India classifies overseas property gains differently based on holding period:

• Held < 2 years: Short-term capital gain (taxed at slab rate, up to 30%+)
• Held > 2 years: Long-term capital gain (taxed at 20% with indexation, or 12.5% without indexation from FY 2024-25 onwards)

Malaysian RPGT for foreigners: 30% (years 1-5), 10% (year 6+).

For a property held 3 years and sold at a gain, you pay 30% RPGT to Malaysia. India's STCG rate may also be 30%. DTAA credit means you effectively pay once, not twice. For long holds (6+ years), Malaysia's 10% RPGT is lower than India's LTCG rate — you pay 10% to Malaysia and the difference (up to 12.5%) to India.

NRI Status: Does It Change Anything?

A Non-Resident Indian (NRI) under FEMA is defined as an Indian citizen who has resided outside India for more than 182 days in the preceding financial year. Many Indian buyers of Malaysian property are NRIs — working in Singapore, the UAE, or elsewhere.

What changes for NRIs:

NRI advantage for Malaysian property investment: If you are an NRI earning in USD, SGD, or AED, your funds are already offshore. You can transfer directly from your foreign bank account to the Malaysian developer's or seller's account without LRS constraints. The LRS ceiling only applies to resident Indians remitting from Indian bank accounts.

Important caveat: If you return to India and become a "Resident" again under FEMA, your Malaysian property remains a foreign asset. You must declare it in your Indian ITR (Schedule FA — Foreign Assets). Rental income becomes taxable in India. Sale proceeds repatriation falls back under LRS limits.

Popular Areas for Indian Buyers

Indian buyer preferences in Malaysia tend toward areas with existing Indian or South Asian community presence, IT sector employment proximity, and international school access.

Cyberjaya is the standout for Indian IT professionals. The multimedia super corridor houses technology companies that employ significant Indian talent. A property in Cyberjaya bought for rental to the IT worker community can achieve 5-6% gross yield. The minimum threshold issue: Cyberjaya is in Selangor (Sepang district, Zone 2), meaning the foreign minimum is RM2M. This prices most Cyberjaya condos below the foreigner threshold.

Workaround: Look at KL properties near the KL-Cyberjaya commuter corridor instead. KL's RM1M threshold is more accessible, and many Cyberjaya workers live in southern KL suburbs (Puchong, Bukit Jalil) that are within the KL federal territory.

Property vs MM2H: Investment or Residency?

Indian buyers often consider Malaysian property alongside the MM2H (Malaysia My Second Home) visa. These are related but distinct decisions.

For pure investment: MM2H adds cost (USD 150K+ fixed deposit, USD 10K/month offshore income requirement) without changing the property economics materially. The slight LTV improvement (from 60-70% to potentially 80%) saves you 10-20% downpayment but does not transform the cashflow picture.

For lifestyle/residency: If you plan to spend significant time in Malaysia (education, retirement, remote work), MM2H provides the legal framework. The property purchase becomes part of a larger relocation decision.

For a detailed analysis of MM2H for property investors, see our MM2H property investment guide.

Worked Example: Indian Buyer Purchasing RM1.2M KL Condo

An Indian IT professional based in Bangalore, investing in a RM1.2M condo in Mont Kiara, KL. Annual income INR 40 lakh. Not an NRI (resident in India).

Remittance Planning

Comfortably within a single year's LRS. TCS of 20% applies on the amount above INR 7 lakh — approximately INR 95 lakh. TCS amount: ~INR 19 lakh (claimable as tax credit when filing ITR).

Monthly Cashflow

Negative RM1,025/month — approximately INR 18,400/month. For an Indian earning INR 3.3 lakh/month, this is a manageable holding cost (~5.6% of gross income).

Indian Tax Position

• Malaysian rental income: RM54,000/year = approximately INR 9.7 lakh
• Malaysian tax paid: RM12,930 = approximately INR 2.3 lakh
• Indian tax on this income (at 30% slab + cess): approximately INR 3.0 lakh
• DTAA credit for Malaysian tax: INR 2.3 lakh
• Additional Indian tax payable: INR 0.7 lakh (the difference between Indian rate and Malaysian rate)

Total effective tax rate: approximately 31% (Malaysian 30% + Indian top-up of ~1%).

5-Year Exit Analysis

At 3% appreciation and a 5-year hold, the Indian buyer approximately breaks even. The 30% RPGT in years 1-5 is the killer. Holding to year 6+ drops RPGT to 10% and the math improves dramatically.

Use our RPGT calculator to model your specific holding period and gain scenario.

India Tax on Overseas Property: Filing Requirements

Indian residents who own foreign property must disclose it regardless of whether they sell or earn rental income.

Do not skip Schedule FA. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 imposes serious penalties on Indian residents who fail to disclose foreign property. The penalty is 90% of the value of the undisclosed asset, plus a 30% tax. This is enforced through information exchange agreements — Malaysia and India share tax data.

The Bottom Line for Indian Buyers

The Malaysian property opportunity for Indian buyers is real. Freehold ownership, 4-6% rental yields, and a familiar cultural environment (especially in KL and Penang) make it attractive. The constraints are primarily on the Indian side:

1. LRS limit is manageable for properties up to RM1.2M with financing. Above that, use multiple family members or NRI accounts.
2. DTAA prevents double taxation — you pay the higher rate between Malaysia and India, not both.
3. NRI status simplifies everything — no LRS constraints on foreign-earned income.
4. Filing compliance is mandatory — Schedule FA, every year, no exceptions.
5. Hold for 6+ years — the RPGT drop from 30% to 10% transforms the exit economics. For a detailed walkthrough of the RPGT exit cost and foreigner-specific exemptions, see our foreigner RPGT selling guide.

Related resources:

• Complete foreigner buying guide
• Minimum price by state
• Buying property from Singapore
• Rental income tax guide
• Stamp duty calculator
• RPGT calculator
• Cashflow calculator