Home Purchase Tax Relief is one of the reliefs introduced by the Inland Revenue Board (IRB) to help ease the burden on first-time home buyers in Malaysia.
This means you can claim an income tax deduction of up to RM7,000 per year based on your home loan interest payments.
Below is shared further information regarding the first home purchase tax exemption below.
What is Home Purchase Tax Relief?
Home purchase tax relief is a tax reduction given to individuals who purchase their first residential home.
This incentive allows taxpayers to deduct the amount of loan interest (interest) or the bank profit rate (profit rate) from their total taxable income.
This home purchase tax exemption has the right to be claimed in the first home sale and purchase agreement that is completed January 1, 2025 to December 31, 2027.
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House Price Categories & Tax Relief Limits
The maximum annual tax relief limit is determined based on the house price stated in the Sale and Purchase Agreement (SPA):
| First Home Price | Maximum Annual Emission Limit |
|---|---|
| Up to RM500,000 | Maximum RM7,000 |
| More than RM500,000 to RM750,000 | Maximum RM5,000 |
Eligibility Conditions
To ensure your claim is valid and avoid penalties during an IRB audit, you must meet the following key requirements:
- First House only: You have never owned any other home before this.
- Self-Occupied Goals: Property must be purchased to be used as a place to live, not to be rented or used as an investment.
- Have Units: Limited to one (1) unit residence only for each individual.
- Agreement Period (SPA): The Sale and Purchase Agreement (SPA) must be executed and executed between January 1, 2025 and December 31, 2027.
- Claim Period: This relief can be claimed for three (3) consecutive assessment years starting from the first year of loan interest payment.
If you buy a home with a partner, sibling or other family member, the law dictates that claims for this tax relief must be based on division.
Benefits For Malaysians
The implementation of the Home Purchase Tax Relief incentive has had a huge positive impact, especially for the middle-income group (M40) and the younger generation who are just starting their careers.
Following are the key benefits that Malaysians are enjoying as a result of this initiative:
1. Reduction of Commitment
Excess money from tax savings can be diverted to cover initial costs after purchasing a home such as renovation costs, purchasing furniture, or maintenance costs.
2. Increased Purchasing Power of the Young Generation & M40
- The eligibility ceiling of up to RM750,000 house price is very much in line with the current affordable market price range in urban and suburban areas.
- With this tax relief, bank loan interest commitments will no longer be felt as an absolute burden, while increasing the confidence of the younger generation to own their own assets.
3. Reduces the Financial Burden of First Home Buyers
These incentives act as a series of support packages along with existing schemes (such as 100% stamp duty exemption for SPA under RM500k) to minimize the cost of property ownership from the initial stage to the installment payment stage.
4. Fair Benefits for Couples (Joint Loan)
Both parties can enjoy income tax relief in their respective e-Filing based on the amount of their monthly contributions.
More Information & Home Purchase Tax Relief FAQs
For further information, please refer to the official portal of the Internal Revenue Agency (LHDN).
Malaysian citizens who purchase their first home only and sign a Sale and Purchase Agreement (SPA) between 1 January 2025 to 31 December 2027.
The amount of the deduction is based on the price of your home:
– House prices up to RM500,000: Maximum deductions RM7,000 a year.
– House prices RM500,001 to RM750,000: Maximum deductions RM5,000 a year.
You can claim this relief for three (3) consecutive years starting from the first year you started paying loan interest to the bank.
Can’t. The IRB’s strict requirements state that the home must be occupied as a residence, not for investment or rental purposes.
Qualified, provided the loan taken is a housing loan to build your first home. The SPA document or construction contract must be completed within the specified time period (1 January 2025 to 31 December 2027).
Decent, if used for residential purposes only. Although some serviced apartments have commercial land status, if they are purchased for residential use (non-commercial/SOHO/Airbnb) and meet the residential structure requirements, then the apartment can be claimed.
Yes. The amount of your e-Filing claim will change annually according to the actual interest/profit amount stated on your bank’s Annual Financing Report for the relevant assessment year, subject to the maximum eligibility limit (RM5,000 or RM7,000).
You both have the right to claim, but the annual interest must be divided according to the percentage of each part of the payment in the e-Filing form.
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