Claim your housing loan interest as personal tax deduction/relief up to RM10,000 per year for 3 years of assessment (RM10,000 x 3 YAs = RM30,000 in total), if you buy a house before 31 Dec 2010, or if you already bought a house since 10 March 2009.
Do you meet the following conditions or criteria:
- Malaysia citizen and resident in Malaysia;
- Purchase of residential property is limited to one (1) unit;
- Sale and Purchase Agreement signed from 10 March 2009 to 31 December 2010; and
- That residential property must not be rented out.**
** The condition only said it must not rented out. In this case, property under construction should be qualified.
If you fulfill all the conditions above, congratulation to you! You may claim the housing loan interest incurred as personal tax relief up to RM10,000 per year for 3 consecutive years of assessment from the year of assessment in which the loan interest is first expended. In total, you may claim up to RM30,000 (RM10,000 per year x 3 years of assessment).
For example, say you signed the S&P on 30 September 2010, the first interest cost the bank charged you was, say on 1 November 2010, then the 3 years of assessment is commencing from YA 2010, then YA 2011 and YA 2012. If the interest cost from 1 Nov 2010 to 31 Dec 2010 is only RM3,000, you are only allowed to claim the tax relief on the interest cost incurred, i.e. RM3,000.
If the property is jointly purchased by more than 1 person, all of them are entitled for the relief restricted to maximum of RM10,000.
For example, Person A claims RM2,000, Person B claims RM3,000 and Person C claims RM5,000. Total claims must not exceed RM10,000. The key point is, you must have incurred at least RM10,000 interest cost on the housing loan.
Click here for Press Release from Malaysia Inland Revenue Board.
Legal reference: Income Tax Act, 1967
Section 46B. Deduction for individual on interest expended
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Hi,
My friend brought a house on Sept 2010. Is he eligible for the above interest tax deduction even this is his 2nd house. Did he need to inform Lemabaga hasil? Is there any form to fill? TQ
It appears your friend did qualify for the interest relief. It only says 1 property, but not the first property.
Under self-assessment system, there should be no form to be filled up. All you may need to do is to declare and claim in your personal tax return in 2011.
Dear Sir,
I bought a new house in last year (2010) and it is under Developer Interest Bearing Scheme (DIBS), loan interest during construction (until Vp) is borne by developer.
Purchase information
- SPA signed in May 2010
- First loan interest charged (paid by developer) – Jun 2010
- Expected VP date – Sep 2011
I am not too sure, does DIBS scheme has any impact to loan interest relief ?
Which years of assessment should I claim the loan interest relief and amount ?
1) YA2010, YA2011 and YA2012
- will claim all loan interest charged even being paid by developer
- YA2010 : Will claim all loan interest incurred even loan interest being paid by developer
- YA2011 : Will claim all loan interest incurred before VP and after VP (includes loan interest paid by developer)
- YA2012 : Will claim all loan interest incurred
or
2) YA2011, YA2012 & YA2013
- YA2011 : Only claim all loan interest incurred after VP (will not claim loan interest portion paid by developer)
- YA2012 : Will claim all loan interest incurred
- YA2013 : Will claim all loan interest incurred
or
3) YA2010, YA2011 & YA2013
- YA2010 : will not claim loan interest relief as loan interest being paid by developer
- YA2011 : Only claim loan interest incurred after VP (will not claim loan interest portion paid by developer)
- YA2012 : Will claim all loan interest incurred
I have checked the IRD website, but did not find any info related to DIBS.
I hope you will be able to clearify.
Thank you very much.
Hi NBC, I have the same concern as Liang too. Would you assist ?
Hi Liang, in our view, 3rd way is likely the case. This could also an area need clarification from IRB. In our view, those interest borne by the developer may also counting towards the RM10,000 cap. Say, developer bore and paid RM10,000 interest in any year, the taxpayer may not entitle to further relief or deduction in the that year.
Hi, my SPA is 04/2009. The Project was under DBIS which the Developer started servicing the interest in 2011. I only started servicing my loan in 2012. My queries is am I entitled to the following year 2013 & 2014? Appreciate your reply, tks!
Hi Mandy, by referring to your SPA, you supposed to serve loan interest in 2009, 2010 & 2011, but it was subsidised by the developer since then. So, you have not actually paid for any loan interest.
In this case, you will have nothing to claim in 2009, 2010 & 2011. Since the period was already over, you are not allowed to claim loan interest that you paid in 2012.
Hi there
I would like to check with you whether the deduction is fixed?
For example, last yr. a husband & wife had jointly claimed the deduction in the ratio of 5:5
Can the husband claim the interest deduction in full in the second yr. in order to reduce tax?
Hi Ivy, once you have claim the interest in such ratio, it is strongly advised to keep that ratio.
Even though it is not stated you can’t do in that manner, but the intention is very obvious and may attract attention from IRB officer. The same goes to child relief.