Post #58

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

Read Page 18 onwards for Expense Relating to Income of Letting of Real Property

URL: http://lampiran1.hasil.gov.my/pdf/pdfam/PR_12_2018.pdf

Recurring expenses
(a) Assessment and quit rent
Annual assessment paid to the local authority and quit rent paid to the land office.
(b) Interest on loan
Interest paid on loan taken to finance the purchase of real property which is rented out.
© Fire insurance premium
Fire insurance premium paid in relation to fire insurance policy taken on the real property which is rented out.
(d) Expense on rent collection
Rent collection fee and legal expense incurred to enforce rent collection.
(e) Expense on rent renewal
Expense incurred to renew tenancy or to change tenant.
(f) Expense on repair
Expense on ordinary repair to maintain the real property in its existing state.

Initial expenses
Initial expense is not allowed a deduction from income of letting of real property assessed under paragraph 4(a) or paragraph 4(d) of the ITA since that expense is incurred to create a source of rental income and not incurred in the production of rental income. Examples of such expense are cost to obtain the first tenant such as advertising cost, legal cost to prepare rental agreement, stamp duty and commission for real property agent.

Expenses during a period the real property is not rented out
Expenses incurred in relation to a real property during a period it is not rented out are not allowable in calculating the adjusted income from the letting of the real property. However, if the period the real property is not rented out occurs after it has been let out and it is clear that it is ready to be let out, then expenses during that period are allowable subject to subsections 33(1) and 39(1) of the ITA.

Isn't what you mentioned falls under Initial Expenses?
This is also confirmed by a tax consultant in the other link shared

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Stamping fee and stamp duty not the same?

If for new tenant, cannot claim
If for current tenant via tenancy renewal, can claim.

As simple and straight forward as I believe.

Hi, my brother and I share 2 properties @ 50%:50%

Both are apartments -
Property #1 - Has been vacant for many many years
Property #2 - it was cleaned up and rented out in Aug 2018, from Jan-Jul 2018, it was vacant.

For my rental income reporting :
1. Can I deduct the cost of management fees from Jan-Jul 2018 for  Apartment #2 from the rental income when I calculate nett income?
(The tenancy agreement was singed by tenant, me and my brother)

NO you cant, that expenses did not help u bring in rental income.

2. I hired come cleaning ladies and plumber to do up the place before I rent it out. I have receipts for the service. Can I deduct these as expenses?

No, initial expenses not allowed

3. Tenant wanted an extra queen size bed. So I went out and got a brand new one for his family. Can I deduct that furnishing as expense?

Again No, initial expenses


4. Apartment #1 is empty and we still have to pay the management fees. Can we deduct the management from the income of Apartment #1 when we report income?

Again No, apartment 1 expenses did not help bring apt 2 rental.

5. I will be reporting my 50% portion of the total income from the rental, is that correct?

rental deduct  allowed expenses first, then only divide by 2.
Not rental  divide by 2 first, then deduct expenses

Thanks for your advice.

Thanks for the answers. So let me get this right :

1. If the expense for repairs and cleaning are incurred BEFORE tenant moves in, then it is considered INITIAL EXPENSE (Para 8.3 of IRB Public Ruling 12/2018), therefore cannot be deducted.

2. If the very same expenses are incurred DURING/WHEN it is being rented out, then it is an expense related to letting of property, and therefore CAN BE DEDUCTED from income.