Property Tax Malaysia: Stamp Duty, RPGT, Quit Rent & Assessment Rate Explained

"Property tax" in Malaysia is not one tax. It is at least four separate taxes, collected by three different levels of government, at different points in the property lifecycle. Most guides pick one and ignore the rest. That leaves you with a dangerously incomplete picture of your actual tax burden as a property owner or investor.

The four property taxes are: stamp duty (paid once when you buy), Real Property Gains Tax or RPGT (paid once when you sell at a profit), quit rent or cukai tanah (paid annually to the state land office), and assessment rate or cukai taksiran (paid biannually to the local authority). On top of these, rental income from the property is subject to income tax. This guide covers all of them — what they are, who collects them, how they are calculated, and what they add up to over a 10-year holding period.

The 4 Property Taxes at a Glance

These taxes are governed by different legislation:

• Stamp duty — Stamp Act 1949
• RPGT — Real Property Gains Tax Act 1976
• Quit rent — National Land Code 1965 (state-level)
• Assessment rate — Local Government Act 1976 / Strata Management Act 2013

Each has its own exemptions, rates, and payment deadlines. Confuse them at your peril.

Stamp Duty: The Upfront Hit

Stamp duty is the largest single tax event for most property buyers in Malaysia. It is charged on two documents: the Memorandum of Transfer (MOT) and the loan agreement.

MOT Stamp Duty Rates (2026)

These rates apply to Malaysian citizens and permanent residents (LHDN — Stamp Duty). Note: Budget 2026 proposes an increased 8% flat rate for non-citizens and foreign companies, effective 1 January 2026.

These rates are tiered, not flat. An RM 500,000 property does not attract 2% on the full amount. It attracts 1% on the first RM 100K and 2% on the remaining RM 400K.

MOT stamp duty on RM 500,000 property:

On top of this, loan agreement stamp duty is a flat 0.5% of the loan amount. For a 90% LTV loan on an RM 500K property:

Loan Stamp Duty = RM 450,000 x 0.5% = RM 2,250

Total stamp duty = RM 9,000 + RM 2,250 = RM 11,250.

First-Time Buyer Exemptions

Malaysian first-time homebuyers purchasing properties priced up to RM 500,000 can get a full stamp duty exemption on the MOT and a full exemption on the loan agreement stamp duty under the prevailing government incentive schemes. This exemption has been extended until 31 December 2027 following Budget 2026. The buyer must be a Malaysian citizen and must never have owned any residential property. This saves over RM 11,000 on the example above.

Key takeaway: Stamp duty is the single largest upfront tax cost. For an RM 500K property, expect ~RM 11K. First-time buyers under the RM 500K threshold can avoid this entirely.

For a full breakdown with worked examples at multiple price points, see our Stamp Duty Malaysia Guide 2026 and use the Stamp Duty Calculator for instant estimates.

RPGT: The Exit Tax

Real Property Gains Tax is charged on the profit from selling a property. The rates depend on how long you held the property and your residency category.

2026 RPGT Rates

(LHDN — RPGT Rates; Schedule 5, RPGTA 1976)

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The critical number: year 6. Malaysian citizens and PRs pay 0% RPGT on disposals from year 6 onward. This is the most generous capital gains treatment in the region. Foreigners and companies never reach 0% — their floor is 10%.

How Chargeable Gain Is Calculated

Chargeable Gain = Disposal Price - Acquisition Price - Allowable Expenses

Allowable expenses include stamp duty paid on purchase, legal fees, renovation costs (with receipts), and real estate agent commissions on both sides. These deductions reduce your taxable gain directly.

Key RPGT Exemptions

1. Once-in-a-lifetime exemption — Malaysian citizens and PRs can exempt any single private residence disposal from RPGT entirely. Use it on your largest gain (LHDN — Exemption).
2. RM 10,000 or 10% exemption — On every disposal, all individuals (including foreigners) can exempt RM 10,000 or 10% of the chargeable gain, whichever is greater (Paragraph 2, Schedule 4, RPGTA 1976).
3. Transfer between spouses — No RPGT on transfers between husband and wife (donor must be a Malaysian citizen).

For the complete RPGT breakdown, see our RPGT Malaysia Guide 2026 and run the numbers on the RPGT Calculator.

Quit Rent (Cukai Tanah): The Land Tax

Quit rent is an annual land tax paid to the state land office. It has been around since colonial times. Every property owner in Malaysia — landed or strata — pays it.

How Quit Rent Is Calculated

Quit rent is calculated based on the land area of the property and the rate set by the state government. Rates vary by state and by land use category (residential, commercial, agricultural, industrial).

For landed properties, the calculation is straightforward: land area (in square feet or square meters) multiplied by the rate per unit area.

For strata properties (condos, apartments, serviced residences), the quit rent for the entire land parcel is divided proportionally among all unit owners based on their share units allocated in the strata title. Your share of the quit rent is typically very small.

Typical Amounts

These amounts are low relative to the other taxes. But they compound over a long holding period. And late payment attracts penalties — some states charge a surcharge of up to 100% of the outstanding amount.

Payment

Quit rent is due by 31 May each year in most states. You can pay at the state land office, through online portals (varies by state), or through designated payment counters. Keep receipts. You will need proof of quit rent payment if you ever sell or transfer the property.

Assessment Rate (Cukai Taksiran): The Local Authority Tax

Assessment rate is the tax paid to your local council (Pihak Berkuasa Tempatan or PBT). It funds municipal services — waste collection, road maintenance, drainage, street lighting, public amenities.

How Assessment Rate Is Calculated

The formula:

Assessment Rate = Annual Rental Value x Rate Percentage

Annual Rental Value (ARV) is an estimate of the property's rental value per year, determined by the local authority's valuation department. This is NOT the actual rent you collect — it is an administrative valuation that may not reflect current market rates. ARVs are periodically revised.

The rate percentage is set by each local authority and varies by jurisdiction and property category. Typical rates range from 4% to 12% of ARV.

Worked Example

For a condo in Kuala Lumpur valued with an ARV of RM 12,000 per year, and the local authority charges a rate of 8%:

Assessment Rate = RM 12,000 x 8% = RM 960 per year

This is payable in two installments:

• First half: January to June (due by 28/29 February)
• Second half: July to December (due by 31 August)

Typical Amounts

Key takeaway: Assessment rate is the most significant recurring property tax in Malaysia. Budget RM 500-2,000 per year depending on property type and location. Late payment penalties apply.

For a deeper dive on both quit rent and assessment rate, see our Quit Rent & Assessment Rate Guide.

Rental Income Tax: The Tax You Pay Because You Own Property

Rental income tax is technically income tax, not "property tax." But you pay it because of property, so it belongs in this guide.

Tax Rates on Rental Income

Rental income is taxed under Section 4(d) of the Income Tax Act 1967 (LHDN — Tax Rate; LHDN — Non-Resident).

For residents, the first RM 5,000 of chargeable income is taxed at 0%. The progressive bands mean that lower levels of rental income attract rates of 1–8%, while only the portion above RM 100,000 reaches the 24–30% band. Most small-scale landlords with one or two rental properties fall in the 3–14% effective range.

Deductions That Reduce Your Tax

You can deduct the following from gross rental income before tax:

These deductions significantly reduce the taxable amount. On an RM 2,000/month rental with RM 500/month in deductible expenses, your taxable rental income drops from RM 24,000 to RM 18,000 per year.

For a complete walkthrough, see our Rental Income Tax Malaysia Guide and use the Rental Income Tax Calculator.

Total 10-Year Tax Burden: Worked Example

Let us put it all together. Assumptions:

• Property: Condo in KL, purchased at RM 500,000
• Financing: 90% LTV conventional loan
• Monthly rent collected: RM 2,000
• Annual deductible expenses: RM 6,000 (maintenance fees, insurance, repairs)
• Net taxable rental income: RM 18,000/year
• Effective income tax rate: ~14% (resident in middle bracket)
• Held for 10 years, sold at RM 650,000

Entry Costs (One-Time)

Annual Recurring Taxes (Per Year)

Over 10 years: RM 36,200

Exit Tax (RPGT on Sale)

Capital gain = RM 650,000 - RM 500,000 - allowable expenses (~RM 25,000) = ~RM 125,000

Less automatic exemption of RM 12,500 (10% of gain — applies to all individuals, not companies):

Note: For larger gains, the RM10K/10% exemption only partially offsets RPGT. On a RM 300K gain, a foreigner individual would pay 10% x (RM 300K - RM 30K) = RM 27,000. A company pays 10% x RM 300K = RM 30,000.

Total 10-Year Tax Summary

*From 1 January 2026, foreigners may face an 8% flat stamp duty on MOT instead of the progressive 1-4% rates, which would significantly increase entry costs. Check the latest Budget implementation status.

**Foreigner rental income tax is higher at a flat 30% — total annual tax would be ~RM 6,500/year, making the 10-year annual total ~RM 65,000 and the overall total ~RM 87,250.

Key takeaway: For a Malaysian citizen holding a RM 500K condo for 10 years, the total tax bill is roughly RM 47,000 — about 9.5% of the purchase price. For a non-resident foreigner, it is closer to RM 87,000 (17%) when accounting for the 30% flat rental income tax and RPGT on exit. The single biggest variable is the rental income tax rate: 30% flat for non-residents vs progressive rates for residents.

Tax Optimization Strategies

These are legal, documented, and widely practiced.

1. Hold for 6+ Years (Citizens and PRs)

The drop from 15% RPGT (year 5) to 0% RPGT (year 6) is the single most valuable tax milestone in Malaysian property. On a RM 200,000 capital gain, that one extra year saves RM 30,000. There is no comparable return for patience elsewhere in the tax code.

2. Maximize Rental Income Deductions

Every ringgit of deductible expense reduces your taxable rental income by one ringgit. Keep receipts for:

• Maintenance fees and sinking fund contributions
• Loan interest (this is often the largest deduction)
• Assessment rate and quit rent (these are taxes that reduce other taxes)
• Repairs, insurance, agent fees

Many landlords fail to claim loan interest deductions. On a RM 450,000 loan at 4.5%, the annual interest in the early years is approximately RM 20,000. That deduction alone can reduce your rental income tax to near zero.

3. Use the Once-in-a-Lifetime RPGT Exemption Wisely

Every Malaysian citizen gets exactly one. Do not use it on a RM 30,000 gain from selling an apartment you bought 8 years ago. Save it for the largest capital gain you will ever realize — the family home, or the investment property that appreciated the most.

4. Claim First-Time Buyer Stamp Duty Exemption

If you have never bought a property in Malaysia and the price is RM 500,000 or below, you can potentially save the entire MOT and loan agreement stamp duty. Check the current eligibility window in the latest Budget announcement.

5. Structure Ownership Correctly From the Start

Joint ownership, single ownership, and company ownership each have different tax implications. Joint ownership splits rental income (and the tax burden) between two individuals, potentially keeping both in lower tax brackets. Company ownership has different RPGT rates (10% floor from year 6) and different income tax treatment. Get advice before purchase, not after.

Frequently Asked Questions

Is quit rent the same as assessment rate?

No. Quit rent (cukai tanah) is paid to the state land office for the right to hold the land. Assessment rate (cukai taksiran) is paid to the local authority (council) for municipal services. They are separate taxes, paid to separate bodies, at separate times.

Do foreigners pay the same property taxes?

Foreigners pay the same stamp duty, quit rent, and assessment rate as Malaysians. The differences are in RPGT (foreigners pay 30% for years 1–5 and 10% from year 6, vs 0% for citizens from year 6) and rental income tax (flat 30% for non-residents vs progressive rates for residents).

Can I deduct property taxes from my rental income?

Yes. Quit rent and assessment rate are fully deductible expenses against rental income. This means these taxes reduce your income tax bill. Stamp duty is not deductible against rental income — it is an acquisition cost that is factored into your RPGT calculation when you sell.

What happens if I do not pay quit rent or assessment rate?

Both carry late payment penalties. For quit rent, some states impose a surcharge of up to 100%. For assessment rate, the local authority can impose penalties, register a charge against the property, and in extreme cases pursue legal action. The amounts are small enough that there is no rational reason to be late.

Do I need to pay RPGT if I sell at a loss?

No. RPGT is only charged on gains. If your disposal price (minus allowable expenses) is lower than your acquisition price, no RPGT is payable. However, you must still file the CKHT form within 60 days of the disposal date.

Summary

Property tax in Malaysia is four taxes plus rental income tax. They hit at different times, are collected by different authorities, and are calculated using different methods. The total burden over a 10-year holding period for a typical RM 500K condo is roughly RM 47,000 for a Malaysian citizen and RM 76,000 for a non-resident foreigner. The three biggest optimization levers are: holding beyond year 5 for 0% RPGT, maximizing rental income deductions (especially loan interest), and using the once-in-a-lifetime RPGT exemption on your largest gain.

Sources

• LHDN — Stamp Duty
• LHDN — RPGT Rates (Schedule 5, RPGTA 1976)
• LHDN — RPGT Exemptions
• LHDN — Individual Tax Rates
• LHDN — Non-Resident Tax
• Income Tax Act 1967 — Section 4(d) (rental income)
• Stamp Act 1949
• Real Property Gains Tax Act 1976

Use the Stamp Duty Calculator, RPGT Calculator, and Rental Income Tax Calculator to model your specific scenario.