Becoming a Landlord in Malaysia for the First Time: Tenancy Agreement, Stamp Duty, and Tax

Renting out your property for the first time is exciting, but three administrative tasks can trip you up before you collect a single ringgit: getting the tenancy agreement right, stamping it on time, and declaring your rental income to LHDN. Do all three correctly and you stay legally protected; skip any one of them and you risk fines, court complications, or a surprise tax bill.

This guide walks you through each step in plain language, with current 2025 and 2026 figures.

Why the tenancy agreement is your first priority

A tenancy agreement is a legally binding contract between you (the landlord) and your tenant. It sets out the rent, duration, deposit amounts, and what happens when either party breaches the terms. Without a written agreement, disputes become your word against the tenant’s, and Malaysian courts will default to common-law principles that may not favour you.

What a standard tenancy agreement should include

• Full names and IC numbers of both parties
• Property address and description
• Monthly rent and permitted payment method
• Tenancy duration (commonly 12 or 24 months)
• Security deposit (typically two months’ rent) and utility deposit (typically one month’s rent)
• Permitted use of the property (residential only, for example)
• Repair and maintenance responsibilities
• Break clause or notice period for early termination
• Renewal terms

You may engage a lawyer to draft the agreement (typical legal fee: RM 300 to RM 600 for a standard residential tenancy) or use a reputable template and have it reviewed. Either way, both parties must sign every page.

Stamp duty on your tenancy agreement

The 2025 rate change you must know

Starting 1 January 2025, the RM 2,400 nil-band exemption was removed by the Finance Act 2024 (LHDN). The full annual rent is now subject to stamp duty, with a minimum of RM 10 per instrument.

Current stamp duty rates (effective 2025)

Tenancy duration	Rate per RM 250 (or part thereof) of annual rent
Up to 1 year	RM 1
1 to 3 years	RM 2
3 to 5 years	RM 3
Over 5 years	RM 4

Example: Monthly rent of RM 1,500 (annual rent = RM 18,000), 12-month tenancy. Stamp duty = (RM 18,000 / 250) x RM 1 = 72 x RM 1 = RM 72

Example: Same rent, 24-month tenancy (falls in the 1-to-3 year band). Stamp duty = (RM 18,000 / 250) x RM 2 = RM 144

Stamp duty on a residential tenancy is split equally between landlord and tenant by convention, though the law makes the landlord primarily responsible for payment.

How to stamp: e-Duti Setem only (from 2026)

From 1 January 2026, all tenancy agreement stamping must be done digitally via the LHDN e-Duti Setem portal at edutisetem.hasil.gov.my. Physical counter stamping at LHDN branches is no longer accepted for new tenancy agreements. You upload the signed agreement, pay online (FPX or credit card), and receive a digital stamp certificate. Keep this certificate, you will need it if a dispute goes to court.

Deadline and late-stamping penalties

You must stamp within 30 days of the date the agreement is signed. Missing this deadline triggers a two-tier penalty:

• Within 3 months late: RM 50 or 10% of the unpaid duty (whichever is higher)
• Beyond 3 months late: RM 100 or 20% of the unpaid duty (whichever is higher)

Declaring rental income to LHDN

Rental income is taxable

Rental income from Malaysian property is assessable income under Section 4(d) of the Income Tax Act 1967. It is treated as investment income, added to your total chargeable income, and taxed at your marginal individual income tax rate (not a separate flat rate).

For Assessment Year 2025 income (filed in 2026), the individual tax rates range from 0% on the first RM 5,000 to 30% on chargeable income above RM 2 million. Most salaried landlords with moderate rental income will find the incremental rental portion falls in the 13% to 25% bracket, depending on their employment income.

Non-residents (Malaysian citizens abroad for more than 182 days in the tax year, or foreign property owners) pay a flat 30% on net rental income.

What counts as rental income

• Monthly rent received
• Any premium or advance rent received
• Payment by the tenant for utilities that you have included in the rent

Furniture allowances and service charges explicitly separated in your agreement and paid directly to third parties are generally excluded. Consult a tax agent if your rental structure is non-standard.

Allowable deductions: reduce your taxable rental income

You are taxed on net rental income, not gross rent. LHDN allows the following deductions:

Allowable expense	Notes
Quit rent (cukai tanah)	Annual land tax paid to the state land office
Assessment tax (cukai taksiran)	Paid to the local authority (MPAJ, DBKL, etc.)
Loan interest	Interest portion of your mortgage only; principal repayment is NOT deductible
Fire insurance premium	Building insurance directly tied to the rental property
Repairs and maintenance	Must be repairs that restore the property to its original condition; improvements are not deductible
Agent commission (renewal)	Commission paid to an agent for tenancy renewal, not for the first tenancy

Not deductible: Legal fees and stamp duty for the initial tenancy agreement, principal mortgage payments, furniture or renovation costs.

How to file

Landlords with employment income use Form BE (e-Filing deadline: 30 April, or 15 May if filing online). Landlords with business income use Form B (deadline: 30 June, or 15 July online). Report rental income under the “Statutory Income from Rents” section.

e-Invoice: does it apply to you?

From 2025 onwards, Malaysia’s e-Invoice mandate phases in by annual turnover. Individual landlords with total annual rental income below RM 500,000 are currently exempt from issuing e-Invoices (LHDN FAQ, 2025). However, if your tenant is a business entity, they may be required to issue a self-billed e-Invoice for the rent they pay you. Confirm with your tenant whether they need supporting documentation.

Screening tenants: protecting yourself before the keys change hands

Good tenant selection reduces arrears, property damage, and the painful eviction process.

A practical screening checklist

1. Request identity documents: NRIC for Malaysian tenants; valid passport and employment pass / student pass for foreigners.
2. Verify employment or income: Latest three months’ payslips or bank statements. A rule of thumb is that monthly rent should not exceed one-third of the tenant’s gross monthly income.
3. Check references: Ask for the contact of a previous landlord, then call. Most landlords are candid when asked directly whether they would rent to that person again.
4. CCRIS check (optional): You cannot pull a tenant’s CCRIS report without their consent, but you can ask them to provide a copy. A history of defaults on credit facilities is a meaningful risk signal.
5. Collect deposits before handing over keys: Security deposit (two months) and utility deposit (one month) should clear your bank account before any keys are handed over.

A note on fair screening

Malaysian landlords are not prohibited from setting reasonable criteria (income threshold, no-smoking, no pets), but discriminating on grounds of race, religion, or national origin is inconsistent with Malaysia’s Federal Constitution and can expose you to reputational and legal risk. Keep your criteria property-specific and document them consistently for all applicants.

Key takeaways

• A written tenancy agreement protects both parties; include deposit terms, duration, permitted use, and repair responsibilities.
• From 1 January 2025, the full annual rent attracts stamp duty with no nil-band; stamp within 30 days of signing via e-Duti Setem.
• Common rates: RM 1 per RM 250 annual rent (up to 1 year) and RM 2 per RM 250 (1 to 3 years).
• Rental income is taxed at your marginal individual rate; net income after deductions (interest, assessment tax, quit rent, insurance, repairs) is what LHDN taxes.
• Individual landlords earning under RM 500,000 in annual rent are currently exempt from issuing e-Invoices.
• Screen tenants on financial and character grounds; collect deposits before handing over keys.

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Related reading: Assessment Tax in Malaysia: How It Is Calculated and Paid | After Paying the Booking Fee: What Happens Next

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Frequently asked questions

Do I have to declare rental income if I only rent out one room? Yes. Any rental income received is assessable under the Income Tax Act 1967, whether it is a full unit or a single room. However, if the room is in your own home and you live there too, LHDN allows you to deduct a proportional share of expenses. File under Form BE and declare the net rental income.

What happens if I do not stamp the tenancy agreement? An unstamped agreement is not admissible as evidence in Malaysian courts. If you need to take legal action against a tenant for arrears or damages, you may first be required to pay the overdue stamp duty plus the late penalty before the court accepts the document. Stamp before disputes arise.

Can I deduct renovation costs from my rental income? No. Capital improvements (new kitchen, added bedroom, extension) are not deductible against rental income. Only repairs that restore the property to its original condition qualify. If you install a new air conditioner to replace a broken unit, that is arguably a repair; if you install it in a room that had none, it is an improvement.

My tenant stopped paying rent. What are my legal options? Malaysia does not yet have a Residential Tenancy Act (as of mid-2026). Your main recourse is civil court action under the Specific Relief Act 1950 and the Distress Act 1951, which allows you to seize a tenant’s goods for unpaid rent with a court order. The process takes weeks to months; a well-drafted tenancy agreement with a clear default clause and adequate security deposit is your best protection.

How long must I keep rental income records? LHDN requires you to keep supporting documents (rent receipts, bank statements, expense receipts, stamp certificates) for seven years from the end of the assessment year. This applies even after you sell the property.