Tax on net rent, stacked on your other income at marginal rates.
Tax on rental income
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Net rental income
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Total chargeable income
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Tax without rent
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Tax with rent
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Rent is not taxed on its own, it rides on top of your salary
A frequent misunderstanding is that rental income has its own tax rate. It does not. In Malaysia, net rental income is added to your other chargeable income, your salary, business profit, and so on, and the combined figure is taxed on the resident progressive scale that LHDN, the Inland Revenue Board of Malaysia, applies. The practical consequence is that the same RM1,000 of rent costs a low earner almost nothing in tax but costs a high earner a sizeable share, because the rent is taxed at whatever marginal band it lands in once stacked on everything else. This calculator captures that by computing your tax twice, once without the rent and once with it, and reporting the difference. That difference is the true cost of the rental income, and it is the number landlords should plan around.
First, strip out the deductible costs
You are taxed on net rent, not gross. Deductible expenses include the assessment rate and quit rent on the property, interest on the loan used to buy it, fire insurance, agent fees for finding a tenant, and the cost of repairs and maintenance that keep the property in its existing state. Initial improvements and the principal portion of your loan repayment are not deductible. So a property bringing in RM24,000 a year with RM9,000 of allowable costs has net rental income of RM15,000, and that RM15,000 is what gets added to your other income. Keeping clean records of these costs is the single biggest lever an ordinary landlord has over the tax bill.
A landlord earning RM70,000 elsewhere
Take someone with RM70,000 of other chargeable income who nets RM15,000 of rent, lifting the total to RM85,000. Using the resident bands this calculator applies, tax on RM70,000 alone comes to RM3,700. The rent pushes the next RM15,000 into the band that this tool models at 19 percent, adding RM2,850. So tax with rent is RM6,550, and the extra tax caused purely by the rental income is RM2,850. That is an effective 19 percent on the net rent, far higher than the person's average rate, precisely because rent stacks at the top.
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The chart in the results panel shows where the rent lands in your total income. The rent occupies the highest, most heavily taxed slice.
Reading the result, and the band caveat
Because the tool stacks the rent, two landlords with identical properties can owe very different amounts depending on their day jobs. A doctor on a high salary loses a quarter or more of each ringgit of net rent, while a part time worker may lose almost nothing. The specific bands and the 19 percent figure in the example are the rates this calculator applies for year of assessment 2025, and Malaysia's scale runs from 0 percent on the first slice up to 30 percent at the very top. These bands are not independently verified here, so confirm the current thresholds with LHDN before filing. One thing that is firmly true and worth stating: this is income tax on rent, not a capital gains tax. Malaysia has no general capital gains tax on shares for individuals, and the tax on selling the property itself is a separate charge called RPGT, real property gains tax.
Who benefits from running this, and a common slip
This is for individual landlords with one or a few properties who want to know what to set aside, and for anyone weighing whether a buy to let stacks up after tax. A practical tip: estimate the extra tax now and park it in a separate account each month, because rent feels like spendable cash but a chunk belongs to LHDN. The common slip is deducting the full mortgage instalment. Only the interest portion is deductible, never the principal, and in the early years of a loan the interest share is large, which actually helps your deduction.
Can I deduct a loss if expenses exceed the rent?
If allowable expenses exceed rent for a property, that property simply produces no taxable rental income for the year, and this calculator floors net rent at zero. Rental losses generally cannot be offset against your salary, and the treatment of carrying a loss forward against future rent from the same source has specific rules, so check the current position with LHDN if you are in that situation.
Does it matter if I rent out a room versus the whole house?
The mechanics are the same: net rent is added to your other income either way. What changes is the level of expenses you can claim and how you apportion shared costs when you live in part of the property yourself. If you occupy half the home and rent the other half, you would typically claim only the rented portion of assessment, quit rent, and interest, so adjust the expense figure you enter accordingly.