Every property owner in Malaysia pays two recurring taxes that most people confuse: quit rent and assessment rates. They go to different authorities, fund different things, and are calculated differently. Mix them up and you will miss a payment deadline, pay a penalty, or underestimate your holding costs by a few hundred ringgit a year. For investors running cashflow calculations, that margin matters.
Quit rent goes to the state. Assessment goes to the local council. One is based on land area. The other is based on your property's estimated annual rental value. Both are unavoidable. Both are deductible against rental income. And failure to pay either one has consequences ranging from surcharges to — in extreme cases — losing the property entirely.
This guide breaks down both taxes with actual rates, a worked example, payment methods, and what it all means for your investment cashflow.
Quit Rent (Cukai Tanah)
Quit rent — known in Malay as cukai tanah or cukai petak for strata titles — is an annual land tax paid to the state land office (Pejabat Tanah). It is levied under the National Land Code 1965 (Act 56), specifically Sections 93-101. Section 93 establishes quit rent as a debt due to the State Authority.
Every piece of titled land in Malaysia is subject to quit rent. It does not matter whether the land has a building on it, whether the building is occupied, or whether the owner lives in Malaysia. If you hold title, you owe quit rent.
How Quit Rent Is Calculated
The calculation is based on three variables:
- Land area — measured in square feet or square metres as stated on the title.
- Land use category — residential, commercial, agricultural, or industrial. Commercial land attracts higher rates than residential.
- State-specific rate schedule — each state sets its own rates. There is no uniform national rate.
For individual titles (landed property with its own separate land title), quit rent is calculated on the full land area of the lot.
For strata titles (condos, apartments, serviced residences), quit rent was historically paid by the developer or management corporation as a single sum for the entire land parcel. Under the Strata Titles (Amendment) Act 2016, individual strata owners now receive their own cukai petak (parcel rent) based on their proportional share of the land. This is calculated using the share unit allocated to each parcel.
The formula:
Quit Rent = Land Area (or Share Unit proportion) x Rate per unit area
Quit Rent Rates by State
Rates vary by state and land category. The following are approximate residential rates. Commercial and industrial rates are typically 2-5x higher.
| State | Approximate Rate (Residential) | Typical Annual Range |
|---|---|---|
| Kuala Lumpur (Federal Territory) | RM 0.05 – 0.10 per sq ft of land | RM 100 – 500 |
| Selangor | RM 0.03 – 0.08 per sq ft of land | RM 50 – 400 |
| Johor | RM 0.02 – 0.05 per sq ft of land | RM 30 – 250 |
| Penang | RM 0.03 – 0.07 per sq ft of land | RM 50 – 300 |
| Perak | RM 0.01 – 0.04 per sq ft of land | RM 20 – 150 |
| Negeri Sembilan | RM 0.02 – 0.05 per sq ft of land | RM 30 – 200 |
| Melaka | RM 0.02 – 0.05 per sq ft of land | RM 30 – 200 |
| Pahang | RM 0.01 – 0.03 per sq ft of land | RM 20 – 150 |
| Kedah | RM 0.01 – 0.03 per sq ft of land | RM 20 – 120 |
| Sabah | Varies by district | RM 20 – 200 |
| Sarawak | Varies by division | RM 20 – 200 |
Key point for strata owners: If your condo development sits on a 2-acre lot with 500 units, the total quit rent for the entire lot might be RM 5,000/year. Your individual share — based on your unit's share value — could be as low as RM 10-50/year. This is why quit rent for condo owners often feels negligible. It is. But it still must be paid.
Payment Deadline and Penalties
Quit rent is due by 31 May each year in most states (some states set 1 June as the deadline). The assessment period runs from 1 January to 31 December.
Late payment attracts penalties:
- Most states impose a surcharge of 5-10% on unpaid quit rent after the deadline.
- Selangor, for example, charges a 10% surcharge on arrears.
- KL (Federal Territory) charges a penalty as gazetted from time to time.
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Assessment Rate (Cukai Taksiran)
Assessment rate — or cukai taksiran — is a biannual tax paid to your local authority (Pihak Berkuasa Tempatan, or PBT) under the Local Government Act 1976 (Act 171). This is your municipal or city council: DBKL for Kuala Lumpur, MBPJ for Petaling Jaya, MBJB for Johor Bahru, MPPP for Penang Island, and so on.
Assessment rates fund local public services: road maintenance, street lighting, rubbish collection, drain cleaning, public parks, and local enforcement. It is the closest equivalent Malaysia has to a council tax or municipal property tax.
How Assessment Rate Is Calculated
The calculation is based on two variables:
- Annual Rental Value (ARV) — also called Nilai Tahunan. This is the estimated gross annual rent that the property could generate, as assessed by the local authority's valuation department. It is NOT your actual rent — it is a valuation estimate that may be updated periodically (often every 5-10 years, sometimes longer).
- Assessment rate percentage — a percentage set by the local authority, applied to the ARV.
The formula:
Annual Assessment = ARV x Assessment Rate (%)
Assessment is typically billed in two installments:
- First half: January to June (due by end of February)
- Second half: July to December (due by end of August)
Some councils have slightly different billing cycles. Check your local authority's website or your assessment bill.
Assessment Rates by Local Authority
| Local Authority | Area Covered | Assessment Rate (% of ARV) | Notes |
|---|---|---|---|
| DBKL | Kuala Lumpur | 6% | Flat rate for residential |
| MBPJ | Petaling Jaya | 5 – 12% | Varies by zone and property type |
| MBSA | Shah Alam | 6 – 10% | Varies by property category |
| MPSepang | Sepang, Cyberjaya, Salak Tinggi | 5 – 9% | Newer developments may have lower ARV |
| MPPP | Penang Island | 5 – 8% | Heritage zone properties may differ |
| MBSP | Seberang Perai (mainland Penang) | 4 – 7% | Generally lower than island rates |
| MBJB | Johor Bahru | 5 – 8% | Iskandar zones may have different rates |
| MPJBT | Johor Bahru Tengah | 4 – 7% | Skudai, Taman Universiti areas |
| MPS | Subang Jaya, USJ | 6 – 11% | High-density residential areas |
| MBSJ | Subang Jaya (new council) | 6 – 11% | Separated from Petaling Jaya council |
How ARV Is Determined
The Annual Rental Value is NOT what you actually rent your property for. The local authority's valuation department conducts its own assessment based on:
- Property type (residential, commercial, industrial)
- Location and zone
- Built-up area
- Age and condition of the property
- Comparable rental transactions in the area
ARV revaluations happen infrequently. Many properties in Malaysia are still assessed on ARVs set 10-20 years ago. This means the assessment rate bill is often surprisingly low relative to current market rents. When a revaluation does occur — as several councils have done in recent years — property owners can see their assessment bills increase sharply.
You can appeal your ARV if you believe it is excessive. The appeal process involves writing to the local authority's valuation department within 30 days of receiving a new assessment notice.
Worked Example: RM 500K Condo in Petaling Jaya
Let us calculate the total annual property tax for a typical investment property.
Property details:
- RM 500,000 condominium in Petaling Jaya
- 900 sq ft built-up area
- Strata title
- Development has 400 units on a 3-acre lot
- Current market rent: RM 1,500/month
Quit Rent Calculation
The development's total land area is 3 acres (130,680 sq ft). Total quit rent for the land at approximately RM 0.05/sq ft:
130,680 sq ft x RM 0.05 = RM 6,534/year for entire development
Your unit's share (assuming proportional allocation for a 900 sq ft unit among 400 units averaging 1,000 sq ft):
RM 6,534 x (900 / 400,000 total sq ft) = approximately RM 15/year
In practice, strata quit rent (cukai petak) for a condo typically falls in the RM 50-100/year range after administrative factors and minimum charges are applied. We will use RM 80/year as a realistic estimate.
Assessment Rate Calculation
MBPJ assesses this property with an Annual Rental Value. For a 900 sq ft condo in PJ, the ARV is typically set at RM 10,000-14,000/year (note: this is the council's assessed value, not your actual rent of RM 18,000/year).
Using an ARV of RM 12,000 and MBPJ's rate of 8%:
Annual Assessment = RM 12,000 x 8% = RM 960/year
Paid in two installments:
- First half (Jan-Jun): RM 480
- Second half (Jul-Dec): RM 480
Total Annual Property Tax
| Tax Component | Annual Amount | Payment Frequency |
|---|---|---|
| Quit rent (cukai petak) | RM 80 | Once per year (by 31 May) |
| Assessment rate (cukai taksiran) | RM 960 | Twice per year (Feb and Aug) |
| Total | RM 1,040 | — |
On a property generating RM 18,000/year in gross rent (RM 1,500/month), the total property tax of RM 1,040 represents 5.8% of gross rental income. That is roughly equivalent to 1-2 months of maintenance fees — small but recurring.
For cashflow modelling, always include this RM 1,040 as a fixed annual expense. It does not fluctuate with vacancy. You owe it whether the property is tenanted or empty.
Payment Methods
Both taxes can be paid through multiple channels. The days of queuing at a land office counter are largely over.
Quit Rent Payment
| Method | Details |
|---|---|
| State land office counter | Walk-in with bill or title reference |
| e-Tanah portal | Online payment for most states (Selangor, KL, Johor have active portals) |
| JomPAY | Via internet banking using the biller code printed on your bill |
| Post office | Counter payment with physical bill |
Selangor has moved aggressively to digital. The e-Tanah Selangor portal lets you check arrears, generate bills, and pay online. KL's eTanah JKPTG system covers Federal Territory properties.
Assessment Rate Payment
| Method | Details |
|---|---|
| Local authority counter | Walk-in at your PBT office |
| Local authority website | Most councils have online payment portals (DBKL ePay, MBPJ eBayar, etc.) |
| JomPAY | Via internet banking using the assessment biller code |
| Bank counter / ATM | Selected banks accept assessment payments |
| MyBayar Sabah / Sarawak portals | State-specific portals for East Malaysia |
Key takeaway: Set calendar reminders for May (quit rent) and February/August (assessment). Automate through JomPAY if your bank supports it. The surcharges are small — 5-10% — but they are entirely avoidable.
For Investors: Tax Deductibility and Cashflow Impact
Both quit rent and assessment rate are fully deductible against rental income under Section 4(d) of the Income Tax Act 1967. This means they reduce your taxable rental income, which reduces your tax liability.
Deduction Impact
Using our worked example (RM 1,500/month rent, RM 1,040/year in property taxes):
| Item | Amount (RM/year) |
|---|---|
| Gross rental income | 18,000 |
| Less: Quit rent | (80) |
| Less: Assessment rate | (960) |
| Less: Maintenance fee (est. RM 300/month) | (3,600) |
| Less: Other deductible expenses (insurance, repairs) | (500) |
| Net rental income (before mortgage interest) | 12,860 |
The RM 1,040 in property taxes saved you approximately RM 200-260 in income tax (at a marginal rate of 19-25% for a typical salaried professional). Not transformative, but it adds up across multiple properties and multiple years.
Including Property Tax in Cashflow Models
When evaluating a property investment, your monthly cashflow calculation should include:
Monthly Cashflow = Rent - Mortgage Payment - Maintenance Fee - (Quit Rent + Assessment) / 12 - Vacancy Provision - Tax Provision
For our example:
| Monthly Item | Amount (RM) |
|---|---|
| Gross rent | 1,500 |
| Mortgage payment (RM 450K loan, 4.2%, 30 years) | (2,200) |
| Maintenance fee | (300) |
| Property tax allocation (RM 1,040 / 12) | (87) |
| Vacancy provision (5%) | (75) |
| Net monthly cashflow (before income tax) | (1,162) |
This property is cashflow-negative by RM 1,162/month. The RM 87/month in property taxes is a small contributor compared to the mortgage, but it is one more cost that cannot be ignored. Every line item matters when you are modelling the real cost of ownership.
Use our Cashflow Calculator to model these numbers for any property. It accounts for quit rent, assessment, maintenance, vacancy, and tax automatically.
What Happens If You Do Not Pay
Both taxes have enforcement mechanisms. Ignoring them is not a viable strategy.
Quit Rent Arrears
Under Section 100 of the National Land Code, if quit rent remains unpaid, the state authority can:
- Impose a surcharge (5-10% depending on state).
- Issue a Form 6A notice demanding payment.
- If arrears persist, the land can be forfeited (Section 100). The State Authority may declare the land forfeited to the state. Section 100 states: "...if by the end of that period the whole of that sum has not been tendered to him, he shall thereupon by order declare the land forfeit to the State Authority..."
Land forfeiture for quit rent arrears is rare. It typically only occurs for abandoned properties with years of accumulated unpaid taxes. But it is legally possible, and the threat is real enough that banks conducting title searches will flag quit rent arrears as a defect. This can derail a property sale.
Assessment Rate Arrears
Under the Local Government Act 1976 (Act 171), local authorities can:
- Impose a surcharge on overdue amounts.
- Issue a notice of demand.
- Seize movable property under Section 148 — the local authority can issue a warrant of attachment (Form F of the First Schedule of the LGA 1976) and seize movable property belonging to the owner inside the premises.
- In extreme cases, the local authority can initiate proceedings to sell the property to recover arrears under Section 151 — by applying to the Registrar of the High Court for an order of attachment and sale. This is exceedingly rare but legally permitted. The council must first exhaust Section 148 remedies before proceeding to Section 151.
Practically, the most common consequence is that arrears surface during a property sale. Your buyer's lawyer conducts a local authority search and discovers outstanding assessment. The arrears must be cleared before the transfer can be registered. This delays the sale and can be embarrassing.
The Practical Bottom Line
| Scenario | Quit Rent | Assessment Rate |
|---|---|---|
| Late payment | 5-10% surcharge | 5-10% surcharge |
| Prolonged non-payment | Land forfeiture notice | Charge on property |
| Impact on sale | Title search will flag arrears | Local authority search will flag arrears |
| Impact on refinancing | Bank will require clearance | Bank may require clearance |
Pay on time. The amounts are small. The penalties are avoidable. The consequences of prolonged non-payment are disproportionate to the sums involved.
Strata vs Landed: Key Differences
The quit rent and assessment experience differs significantly between strata (condo/apartment) and landed (terrace/semi-D/bungalow) properties.
| Factor | Strata (Condo) | Landed (Terrace/Semi-D/Bungalow) |
|---|---|---|
| Quit rent amount | Low (RM 10-100/year, proportional share) | Higher (RM 100-500/year, full land area) |
| Assessment rate | Based on unit's ARV | Based on house + land ARV |
| Who receives the bill | Individual owner (if cukai petak issued) or MC | Individual owner directly |
| Payment responsibility | Owner (may be collected by MC for quit rent in some older developments) | Owner |
| ARV basis | Built-up area of unit | Land area + built-up area of house |
For investors comparing strata vs landed, the property tax difference is marginal — perhaps RM 200-500/year more for a landed property. This should not drive your investment decision. Focus on yield, capital appreciation potential, and cashflow. But do include the correct figures in your model.
Frequently Asked Questions
Is quit rent the same as assessment rate? No. Quit rent (cukai tanah) is paid to the state land office and is based on land area. Assessment rate (cukai taksiran) is paid to the local council and is based on Annual Rental Value. They are separate taxes paid to separate authorities on separate schedules.
Can I check my quit rent and assessment arrears online? Yes, for most states and councils. Selangor uses e-Tanah Selangor. KL uses eTanah JKPTG. For assessment, check your specific local authority's website — DBKL, MBPJ, MPS, and most major councils have online portals where you can check outstanding amounts by entering your assessment number.
Who pays quit rent and assessment for a new property before title is issued? The developer pays quit rent on the master title and typically passes the cost to buyers through the maintenance charges or a separate levy. Once individual or strata titles are issued and registered in your name, you become directly liable.
Are quit rent and assessment tax-deductible? Yes. Both are allowable deductions against rental income under Section 4(d) of the Income Tax Act 1967. Keep your receipts. If you are using the standard statutory deduction of 50% (where you claim 50% of gross rent as expenses without itemising), these costs are already captured within that blanket deduction.
What if I own an empty lot with no building? You still owe quit rent on the land. Assessment rate may or may not apply — some local authorities assess vacant land at a reduced rate, others exempt it until a building is erected. Check with your specific PBT.
For a complete picture of all recurring costs that affect your investment cashflow, read our guide on The True Cost of Owning a Malaysian Rental Property. To understand how rental income is taxed, see Rental Income Tax Malaysia. For the breakdown of maintenance fees and sinking fund, see Maintenance Fees and Sinking Fund. And to model your actual monthly cashflow including all these costs, use our Cashflow Calculator or Rental Income Tax Calculator.
Sources
- National Land Code 1965 (Act 56) — JKPTG — Sections 93-101 governing quit rent and land forfeiture
- Local Government Act 1976 (Act 171) — Sections 148 and 151 governing assessment rate enforcement and property seizure
- Strata Titles (Amendment) Act 2016 — Parcel Rent — Cukai petak system for individual strata owners
- Income Tax Act 1967 — Rental Income (LHDN) — Section 4(d) deductibility of quit rent and assessment
- e-Tanah Selangor — Online quit rent payment portal for Selangor properties
- Quit Rent Rates by State (PropertyGuru) — State-by-state quit rent rate reference