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> Rental Income Tax, Rental Income Tax

Showtime747
post Feb 27 2018, 04:45 PM

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QUOTE(thenoobone @ Feb 27 2018, 04:00 PM)
Really?

wow then i have to discuss back with my account person , cause last time another account person randomly declare without proper documentation end up i have to pay RM22k , but already send letter to revise the account as miscalculation

But from the expenses categories being told to me is something like this

1) buy transport for business
2) staff leisure , food , etc
3) shop equipment renovation , machines etc
4) salary staff / director
5) printing accessories
6) petrol toll touchngo
7) advertisement , rental , bills
and few more

correct rite?
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You are talking about expenses related to a business. If your rental is considered a business source, Eg renting out a building like office tower or shopping centre, then it is a business source, you can claim those expenses you listed. Usually the business is run as a Sdn Bhd

However, for the masses who have properties under their personal name, the above expenses are not claimable because it is considered a non-business source

A lot of details and different treatment in relation to rental income in the Public Ruling 4/2011 I linked above. Including how to determine rental income is a business and non-business source


postfishcracker
post Feb 28 2018, 08:23 AM

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QUOTE(Showtime747 @ Feb 27 2018, 04:45 PM)
You are talking about expenses related to a business. If your rental is considered a business source, Eg renting out a building like office tower or shopping centre, then it is a business source, you can claim those expenses you listed. Usually the business is run as a Sdn Bhd

However, for the masses who have properties under their personal name, the above expenses are not claimable because it is considered a non-business source

A lot of details and different treatment in relation to rental income in the Public Ruling 4/2011 I linked above. Including how to determine rental income is a business and non-business source
*
you can claim half if the rental is not less than rm2000.
https://cukaipendapatan.wordpress.com/2017/...endapatan-sewa/
Showtime747
post Feb 28 2018, 10:12 AM

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QUOTE(postfishcracker @ Feb 28 2018, 08:23 AM)
you can claim half if the rental is not less than rm2000.
https://cukaipendapatan.wordpress.com/2017/...endapatan-sewa/
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Yes ! thumbup.gif

That is on rental income of residential properties and applies to each single property a landlord has. Meaning if my rental income per house is RM1800 per month, then my actual reported rental income for tax purpose is only RM900 x 12 = RM10,800. If my tax rate is say, 24%, then my tax savings is ~RM2.6k per property per year

If I have say 3 properties, I "save" ~RM7.8k ! Can buy new Iphone XI plus a Samsung Note 9

But on the expenses side, still no change. Cannot simply claim

The purpose of the above tax incentive is "to encourage landlord to rent out residential homes at a reasonable rate to allow more affordable housing to be made available". Very naive thinking by Ah Jib biggrin.gif Anyway, it is good for the landlord only, I doubt tenants will benefit from the tax incentive by cheaper rental

Sometimes I wonder why I still vote opposition. The current government is so good to us. Whereas if opposition becomes the government, they will be more left wing and socialist programmes. Which means skewed tax rate on the richer society (like UK, USA, Australia up to 49% tax), inheritance tax, luxury car tax, luxury goods tax (eg LV bags, AP watches) etc
postfishcracker
post Feb 28 2018, 04:38 PM

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QUOTE(Showtime747 @ Feb 28 2018, 10:12 AM)
Yes !  thumbup.gif

That is on rental income of residential properties and applies to each single property a landlord has. Meaning if my rental income per house is RM1800 per month, then my actual reported rental income for tax purpose is only RM900 x 12 = RM10,800. If my tax rate is say, 24%, then my tax savings is ~RM2.6k per property per year

If I have say 3 properties, I "save" ~RM7.8k ! Can buy new Iphone XI plus a Samsung Note 9

But on the expenses side, still no change. Cannot simply claim

The purpose of the above tax incentive is "to encourage landlord to rent out residential homes at a reasonable rate to allow more affordable housing to be made available". Very naive thinking by Ah Jib  biggrin.gif Anyway, it is good for the landlord only, I doubt tenants will benefit from the tax incentive by cheaper rental

Sometimes I wonder why I still vote opposition. The current government is so good to us. Whereas if opposition becomes the government, they will be more left wing and socialist programmes. Which means skewed tax rate on the richer society (like UK, USA, Australia up to 49% tax), inheritance tax, luxury car tax, luxury goods tax (eg LV bags, AP watches) etc
*
yes, for expenses no change!
thenoobone
post Mar 1 2018, 01:58 AM

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QUOTE(Showtime747 @ Feb 27 2018, 04:45 PM)
You are talking about expenses related to a business. If your rental is considered a business source, Eg renting out a building like office tower or shopping centre, then it is a business source, you can claim those expenses you listed. Usually the business is run as a Sdn Bhd

However, for the masses who have properties under their personal name, the above expenses are not claimable because it is considered a non-business source

A lot of details and different treatment in relation to rental income in the Public Ruling 4/2011 I linked above. Including how to determine rental income is a business and non-business source
*
Oh man thanks for the input

maybe thats what he meant , any resit but claim under business related spending


Showtime747
post Mar 1 2018, 09:35 AM

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QUOTE(thenoobone @ Mar 1 2018, 01:58 AM)
Oh man thanks for the input

maybe thats what he meant , any resit but claim under business related spending
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Not “any resit” also can claim even for business.

Be careful on entertainment, traveling, car, director’s expenses, BIK....

I am sure your accountant with experience will advise you on the proper way. Just don’t assume “everything” can claim even if it is under a business
thenoobone
post Mar 2 2018, 04:37 AM

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QUOTE(Showtime747 @ Mar 1 2018, 09:35 AM)
Not “any resit” also can claim even for business.

Be careful on entertainment, traveling, car, director’s expenses, BIK....

I am sure your accountant with experience will advise you on the proper way. Just don’t assume “everything” can claim even if it is under a business
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I just submitted to the account person

Directors expenses and car repair resit also he asked , and since i asked why he told me that can be declared under directors cash expenses ?
Showtime747
post Mar 2 2018, 12:14 PM

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QUOTE(thenoobone @ Mar 2 2018, 04:37 AM)
I just submitted to the account person

Directors expenses and car repair resit also he asked , and since i asked why he told me that can be declared under directors cash expenses ?
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Bro, here is rental income tax discussion. Wrong thread to discuss. There is a income tax thread in the sticky you can post your questions there

Anyway, not saying it cannot be claimed, just there are restrictions and proper ways to declare, and also BIK issues

You can post your questions in the income tax thread and get response from tax experts
silverwave
post Mar 4 2018, 11:19 AM

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QUOTE(Ah SiAnG @ Aug 30 2017, 07:52 PM)
Only interest paid on loan taken to finance the purchase of real property which is rented out is deductible.
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Hi, this interest mentioned, is it the loan interest while the property is being rented or while the project is being developed?

I have a condo that is being rented and my understanding was rental income - expenses (maintenance, repairs, etc) = taxable figure
Ah SiAnG
post Mar 4 2018, 11:22 AM

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QUOTE(silverwave @ Mar 4 2018, 11:19 AM)
Hi, this interest mentioned, is it the loan interest while the property is being rented or while the project is being developed?

I have a condo that is being rented and my understanding was rental income - expenses (maintenance, repairs, etc) = taxable figure
*
To my understanding it is loan interest paid during that particular year of assessment while the property is being rented.

You can't be renting out a property while the project is being developed right? Without Certificate of Completion and Compliance.

Please refer to Public Ruling No. 4/2011 Income from Letting of Real Property issued by IRB.


This post has been edited by Ah SiAnG: Mar 4 2018, 11:28 AM
silverwave
post Mar 4 2018, 11:39 AM

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QUOTE(Ah SiAnG @ Mar 4 2018, 11:22 AM)
To my understanding it is loan interest paid during that particular year of assessment while the property is being rented.

You can't be renting out a property while the project is being developed right? Without Certificate of Completion and Compliance.

Please refer to Public Ruling No. 4/2011 Income from Letting of Real Property issued by IRB.
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I'm very new to property but there is a period when the loan gradually starts according to the progress of the property right? May be with DIBS many didn't have to pay. Or my understanding is wrong tongue.gif

Looking at it at a glance but i have not read through fully.

Just had 3 questions in my mind:
1) If the unit is not tenanted, put 0 or leave it blank while filing the tax? My unit was vacant for a year few years back.
2) Usually the bank interest is high during the first few years, assuming the statutory income from rental is a negative number after all the deductions, put 0?
3) I've not declared the first year income from rental, if i want to declare, what are the steps?

Thanks.
postfishcracker
post Mar 7 2018, 05:28 PM

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QUOTE(silverwave @ Mar 4 2018, 11:39 AM)
I'm very new to property but there is a period when the loan gradually starts according to the progress of the property right? May be with DIBS many didn't have to pay. Or my understanding is wrong  tongue.gif

Looking at it at a glance but i have not read through fully.

Just had 3 questions in my mind:
1) If the unit is not tenanted, put 0 or leave it blank while filing the tax? My unit was vacant for a year few years back.
2) Usually the bank interest is high during the first few years, assuming the statutory income from rental is a negative number after all the deductions, put 0?
3) I've not declared the first year income from rental, if i want to declare, what are the steps?

Thanks.
*
1) yes
2) yes
3) go to LHDN office
DjS
post Mar 7 2018, 09:04 PM

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Tumpang thread. Want to ask if i rent out room by room. No tenancy signed as too many copies since i rent room by room. Only giving rental invoice receipt to tenant. How shld i report the tax?

IE FY2018
Master room 700 start rent Jan 18
Bedroom 2 500 start rent Jan 18
Bedroom 3 500 start rent Jun 18
Bedroom 4 500 start rent Dec 18

On Dec 18 bedroom 2 tenant moving out.

If abv scenario is it i kept all rental inv receipt and sum up whole 2018 yr rental income & minus deductable expenses and report to LHDN?


This post has been edited by DjS: Mar 7 2018, 09:05 PM
aspartame
post Mar 8 2018, 07:03 AM

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QUOTE(DjS @ Mar 7 2018, 09:04 PM)
Tumpang thread. Want to ask if i rent out room by room. No tenancy signed as too many copies since i rent room by room. Only giving rental invoice receipt to tenant. How shld i report the tax?

IE FY2018
Master room 700 start rent Jan 18
Bedroom 2 500 start rent Jan 18
Bedroom 3 500 start rent Jun 18
Bedroom 4 500 start rent Dec 18

On Dec 18 bedroom 2 tenant moving out.

If abv scenario is it i kept all rental inv receipt and sum up whole 2018 yr rental income & minus deductable expenses and report to LHDN?
*
Should be. No other way.
iamsolucky
post Jan 10 2019, 11:49 AM

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QUOTE(Showtime747 @ Sep 2 2017, 02:36 PM)
Dear Sifu,

If SPA under joint name A & B,
loan under name A only [loan interest for the particular year RM5000 (example) ]
rental agreement under name A only and annual rental collect RM10000 (example)

Case study:

Total deductible rental income let say RM2000 (cukai pintu, Tanah etc) + RM5000 (interest) = RM7000

when filing rental income, If both A & B have file separately, both also need to declare rental income even if rental agreement under name A only (correct me if I am wrong).

Mr A need to declare rental income : ( RM10000 - RM7000 ) / 2 = RM1500

How about Mr B ? :

1) Mr B need to declare ( RM10000 - RM2000 ) / 2 = RM4000 (Because loan only under Mr A) , or
2) Mr B need to declare ( RM10000 - RM7000 ) / 2 = RM1500 ?

Thank in advance





Showtime747
post Jan 10 2019, 08:25 PM

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QUOTE(iamsolucky @ Jan 10 2019, 11:49 AM)
Dear Sifu,

If SPA under joint name A & B,
loan under name A only [loan interest for the particular year RM5000 (example) ]
rental agreement under name A only and annual rental collect RM10000 (example)

Case study:

Total deductible rental income let say RM2000 (cukai pintu, Tanah etc) + RM5000 (interest) = RM7000

when filing rental income, If both A & B have file separately, both also need to declare rental income even if rental agreement under name A only (correct me if I am wrong).

Mr A need to declare rental income : ( RM10000 - RM7000 ) / 2 = RM1500

How about Mr B  ? :

1) Mr B need to declare ( RM10000 - RM2000 ) / 2 = RM4000 (Because loan only under Mr A) , or
2) Mr B need to declare ( RM10000 - RM7000 ) / 2 = RM1500 ?

Thank in advance
*
Never a sifu.... sweat.gif

Calculation 2 is correct. Each declare RM1500 rental income respectively.

Rental income is apportioned based on the % of ownership. Not according to name in rental agreement (for practicality purpose because tenant don't usually bank in monthly rental for 2 person)

As long as the property is pledged for the bank loan, then the interest is allowable to offset against the income. Although the loan in under A only, B also can claim. Ie. calculate the overall rental income less all expenses, then declare the income based on % of ownership
Showtime747
post Jan 10 2019, 08:29 PM

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QUOTE(postfishcracker @ Feb 28 2018, 08:23 AM)
you can claim half if the rental is not less than rm2000.
https://cukaipendapatan.wordpress.com/2017/...endapatan-sewa/
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Woah....nearly forgot ! For 2018 rental of residential property under RM2000, only declare 50%.

Thank you Najib ! thumbup.gif
addison250
post Jan 10 2019, 09:54 PM

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https://kickmeaway.blogspot.com/2018/11/how...e-for-lhdn.html

After reading a few viral post and some search online, it is minus expenditure, then only 50% discount.
Initially I thought 50% discount, then only minus expenses.
iamsolucky
post Jan 11 2019, 10:51 AM

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QUOTE(Showtime747 @ Jan 10 2019, 08:25 PM)
Never a sifu.... sweat.gif

Calculation 2 is correct. Each declare RM1500 rental income respectively.

Rental income is apportioned based on the % of ownership. Not according to name in rental agreement (for practicality purpose because tenant don't usually bank in monthly rental for 2 person)

As long as the property is pledged for the bank loan, then the interest is allowable to offset against the income. Although the loan in under A only, B also can claim. Ie. calculate the overall rental income less all expenses, then declare the income based on % of ownership
*
Thank you so much for the advice.

As for the madam leong case you share above, regarding the refinance matter. How if:

Madam Leong refinance again to another bank with loan amount RM1.8 million, how to calculate the loan interest for the rental tax deduction ?

Madam Leong previously refinance from bank A to bank B with loan balance from RM1.0 million to RM1.3million, now with bank C RM1.8million.

Which is correct for loan interest deduction ?:

1) 1.0 mil / 1.8 mil x loan interest from bank C or

2) 1.3 mil / 1.8 mil x loan interest from bank C

Thanks in advance
Showtime747
post Jan 11 2019, 11:27 AM

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QUOTE(iamsolucky @ Jan 11 2019, 10:51 AM)
Thank you so much for the advice.

As for the madam leong case you share above, regarding the refinance matter. How if:

Madam Leong refinance again to another bank with loan amount RM1.8 million, how to calculate the loan interest for the rental tax deduction ?

Madam Leong previously refinance from bank A to bank B with loan balance from RM1.0 million to RM1.3million, now with bank C RM1.8million.

Which is correct for loan interest deduction ?:

1) 1.0 mil / 1.8 mil x loan interest from bank C or

2) 1.3 mil / 1.8 mil x loan interest from bank C

Thanks in advance
*
Knowing LHDN does not intend to lose tax revenue, their calculation will be :

The balance of 1st loan at time of 2nd refinancing / 1.8 mil x loan interest from bank c

Ie. Should be lesser than 1.0 million because, assuming there is no refinancing at all, the monthly installation will reduce the principal amount, hence interest expense should reduce accordingly.

I think the main criteria hold by LHDN will be always use the original financing amount an investor needed at the time of buying the property. The interest expense incurred for this original financing amount will be allowable.

You cannot keep on re-financing say, every 10 years and claim interest expense indefinitely biggrin.gif

The safest and to avoid possible penalty, it is best to keep the repayment schedule of the 1st loan and use the balance principal at the time of refinancing for income tax computation

However, I am not sure how many people will follow this way sweat.gif



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