Housing loan interest tax deduction of RM10,000 per year for 3 years of assessment

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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:  

  1. Malaysia citizen and resident in Malaysia;
  2. Purchase of residential property is limited to one (1) unit;
  3. Sale and Purchase Agreement signed from 10 March 2009 to 31 December 2010; and
  4. 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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24 COMMENTS

  1. 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

  2. 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.

  3. 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.

  5. 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.

  6. 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.

  7. 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.

  8. Hi, i would like to ask if the S&P is sign under A & B name but the loan agreement is under A name only,can B oso entitled to claim for the relief?

  9. Hi, my husband is foreigner and i am a housewife. We bought house aug 2009 under my name and loan also under me but my husband is the guarantor. we do joint assessment and eligible to do under resident assessment but they told us we cant claim the loan interest rebate and it must be claim by me when i am working but how to claim as am not working and as head of the family and the sole bread winner my husband is the one that should claim in our joint assessment.Can you help me to clarify this and confirm whether we can claim it for our joint 2012 assessment? thanks

  10. We have bought a property in aug 2013 and we want to know if it is better to take a loan so as to reduce the tax liability (by deducting interest paid) when we want to sell. Would appreciate advice.

    • hi cnfcnf, the interest will not help at all when calculating RPGT. Furthermore, your property purchased on Aug 2013 will not be entitled for interest tax deduction.

      As such, regardless you pay full cash or taking loan, it will not help your RPGT when you want to sell.

      However, if you want to let out the property, then yes, loan interest can be off-set against the rental received from that property, and thus reduce your tax liability on the rental received.

  11. Thank you so much for your message. I would like to clarify:

    – Suppose my monthly payment for mortgage is RM5000 (RM3000 for principal and RM2000 for interest)
    – My rental is RM6000.
    – Does this mean my net income is from rent is RM1000 (6000-5000) or is it RM4000 (6000-2000)?

    Thanks,
    cnfcnf

    • cnfcnf, your net income is RM4,000 (Income less expenses => 6k-2k).

      You can not take in principal payment when calculating net rental income.

      The following are also deductible:
      1. quit rent
      2. assessment
      3. fire or other insurance on property

  12. May i know if Tax Relief of Housing Loan up to RM 10k still applicable for calendar year 2013 (means to be filled next year)?

    I sign s&p on dec 2010 & start pay interest from 2011. I’ve claim tax relief for YA 2011 & YA 2012.

    Am i entitled to claim the same for YA 2013? Thanks

  13. Hello Angelina,

    I have quite a similar issue with Lee.

    I bought a house in 2010 and started paying interest since November 2010.

    1) I DID NOT file for tax relief for YA2010 (filed in 2011).

    2) I DID file for tax relief for YA2011 (filed in 2012) for the max RM10k.

    3) I DID NOT file for tax relief for YA2012 (filed in 2013) as I thought the RM10k exemption can only be claimed once for one property.

    Now, for YA2013 (to be filed in 2014) can I file for tax relief up to a maximum of RM10K for the property I bought in 2010?

    I thank you in advance for your expert views on this.

  14. Hi,
    I have bought a house (HS1) in 2010 and start claim interest in YA 2012. My wife also bougt another property (HS2) in 2012 and start claim interest in YA2012 as well. both property are joined name (husband and wife) as well as loan. We are going for serperate assessment.
    can i claim the interest of 10k for property HS1 ? and my wife claim another interest of 10 for property HS 2 ? in ya 2012,2013 and 2014?

  15. Hi NBC,
    Need some guidance on this matter.

    I have fulfilled all 4 conditions for this deduction.

    I am a malaysian, 1 property, S&P signing date and also not rented out.
    My issue is the loan is under my name (I am paying it), while the S&P is under my father’s name.

    If we were to refer to the conditions, it does not say the S&P need to be under my name, the point on condition 3 is the signing date range.

    Now I got LHDN auditor questioning me on the S&P signatory, which is not listed in the conditions, nor the section 46b. Not sure what should I do.

    Thank you.

  16. Hi,

    What should I do if I found out i had wrongly claim this housing loan interest rebate for 2 years by signing up the SPA end of yr 2008?
    LHDN had send severe letter to request for my SPA and loan statement. What should I do??

    • Teng, produce every thing that requested by LHDN & talked to them on the mistakes made. Not to comply with their request will get even worse & more penalty.

      LHDN will reverse the claim anyway if they do not obtain supporting documents from you within the timeframe given by them.

  17. Hi,
    Totally zero knowledge in tax refund/claim/relief here. I just bought my 1st house signed January 2014 but not yet complete till today; estimate april 2016. paid progressive interest for 8month already and still paying. i want to know if im eligible to claim during e-filing this year for house purchased and also for the progressive interest paid.
    Please help enlighten. Thanks

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