8 responses

  1. Greg
    July 5, 2013

    If I owned a Freehold home in Tawau would I be able to claim rental income as a business source? Thanks!

    • Richard
      December 19, 2013

      Unless you can prove that you are ‘actively and comprehensively’ providing support services, it’s unlikely you can.

  2. Greg
    July 5, 2013

    My previous comment was mysteriously deleted so let me try this one more time……

    If I am a foreigner and I owned a freehold house in Tawau could I rent out the home and claim the income as a business source?

    • Richard
      July 7, 2013

      Hi Greg,

      Your comment didn’t disappear; comments require approval before they can appear.

      You can only claim rental income as a business source provided that you actively and comprehensively provide maintenance services or support services in relation to that property. Do read more about the circumstances that rental income qualifies as a business source, do read my earlier article on Taxation Of Property Rental Income As A Business Source.

  3. Greg
    July 8, 2013

    Hello Richard thanks for your response.

    In the USA I also rent out a home, and if something breaks in or around the home and it is not the tenants fault (for example an electrical socket going out due to no fault of the tenant, or even a toilet) then I would be responsible for the cost of fixing it i.e. the maintenance, I also pay for a gardener to come weekly to take care of the yardwork.

    Would this situation be able to qualify as a business source of income if in Malaysia? Thanks!

    • Richard
      July 8, 2013

      Hi Greg,

      In this context, the expenses that you incur as a landlord (please do spell them out in your tenancy agreement, though) will qualify for a deduction against rental income. From the perspective of a business source, you may not qualify as a business source, ie. (among others), any excess of rental expenses over rental income, cannot be carried forward to set off the net rental income in future years.

      Please do bear in mind that as a non-Malaysian tax resident from tax perspective, you would be subject to income tax at a rate of 26% of the net rental income that you receive.

      I hope this information is helpful.

  4. AVY
    July 10, 2013

    Dear Richard:

    Hi. I have rent out double storey house. And I have provide maintenance service such as structural, drain, lighting,water tank,….all items in the house and within the boundary of the house. I do employ a maid to clean the house weekly basis. If I have provided this service to the house, can I declare my rental income as a business income?

    If cannot. Then can I still set up a LLP company to collect rental income only and but declare as non business income. The tax rate is it below RM500k is 20%only.

    Pls advise. Your reply is highly appreciated. TQ.

    • Richard
      August 29, 2013

      Really sorry for the late reply as I just realized that your comment was wrongly caught under the ‘spam’ filter.

      By virtue of the number of units which you are providing support services to, it is my opinion that it would be very difficult to treat the rental income from your property as business income. Even though you are providing such support services to several properties along the same vein, it may very well be challenged by IRB by virtue of the definition of ‘comprehensively and actively provided’ as stated in their PR 4/2011 (see my earlier post on ‘Taxation Of Property Rental Income As A Business Source‘. In my opinion, the more units you have providing support services in the same manner, the better the chance you’ll have in having your rental income qualifying as a business source.

      You could set up a LLP to place your future property investments in, but not recommended for the current ones. Please do bear in mind the potential legal and stamp duty implications of transferring your present properties to a LLP.

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