Relief on first-home loan interest, up to RM7,000 a year.
Tax saved
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Relief claimable
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Relief cap
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A relief on interest, not on your loan repayment
This relief lets a first-home owner deduct housing loan interest from total income before tax is worked out. The word interest matters. Your monthly mortgage instalment is mostly principal plus interest, and only the interest slice qualifies. The principal you repay is not deductible at all. So the figure to enter is the interest portion of a full year of payments, which your bank shows on the annual loan statement, not the sum of your twelve instalments. The relief this calculator applies is capped at RM7,000 of interest per year of assessment, and the tax you actually save is that relief multiplied by your marginal tax rate. Confirm the current cap and the eligibility window with LHDN (the Inland Revenue Board of Malaysia), since reliefs of this kind are introduced and withdrawn through the Budget.
The eligibility fine print most people skim past
A relief like this is usually tied to tight conditions: it has to be your first residential property, the price has to sit inside a qualifying tier, the sale and purchase agreement has to be stamped within a defined window, and you cannot be renting the place out as a pure investment. Some versions also stagger the relief over the first few years of the loan rather than offering it indefinitely. Because these conditions change between Budgets, the calculator treats the RM7,000 ceiling as its working assumption and leaves the eligibility test to you. Before you claim, line up your loan agreement, the SPA date, and the property price against the current LHDN guidance, and keep the bank interest statement on file in case LHDN asks for it.
RM12,000 of interest at a 25 percent marginal rate
Suppose you paid RM12,000 of housing loan interest in the year and your top slice of income is taxed at 25 percent. The relief is capped, so only RM7,000 of that RM12,000 counts. Multiply RM7,000 by your 25 percent marginal rate and the tax saved is RM1,750. The extra RM5,000 of interest you paid above the cap earns you nothing back in tax, which is the key thing the cap does.
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The chart separates the two ideas people conflate. The relief is RM7,000 of deductible interest, but the money back in your pocket is only RM1,750, because relief saves tax at your rate, not ringgit for ringgit.
Why your tax rate decides the value
The same RM7,000 of relief is worth very different amounts to different people. A buyer whose top income falls in an 11 percent band saves RM770, while one in the 25 percent band saves RM1,750 from an identical claim. That is how marginal reliefs work everywhere: the higher your top rate, the more a deduction is worth. The practical implication is that a relief is more valuable in your higher-earning years, and if a couple both have loans, the partner on the higher marginal rate generally gets more out of claiming. A frequent mistake is entering the full annual instalment instead of the interest portion, which overstates the relief; the cap usually hides the error, but in early loan years when interest is high it can still mislead you on the eligible amount.
Can my spouse and I both claim on the same home?
Where a property is jointly owned and jointly financed, the relief is generally apportioned according to each owner's share of the interest, and each spouse claims their portion against their own income, subject to the cap. You cannot both claim the full RM7,000 on the same interest. The exact treatment depends on how the loan and title are structured, so confirm the split with LHDN.
Does this relief reduce my loan or just my tax?
Only your tax. It does nothing to your outstanding loan balance or your monthly instalment, which the bank sets from the principal and the interest rate. The relief simply lowers the income LHDN taxes, so you keep a little more of your salary. Think of it as a small annual rebate for being a first-home borrower, not as a way to pay the mortgage down faster.