Hi,

I have a question if i own 2 houses, one is rental out the whole unit and another one is rental out 2 rooms where I'm still staying in master room.

Question:

1. I declare the 2nd house room rental income in LHDN. Can I deduct the rental taxable income with maintenance, bank loan interest and etc? If yes, what is the calculation would be? 100% of the eligible expenses or partially?

2. Can I combine the expenses and income for both houses?

Thanks

most people want to avoid tax unless there is a reason
may i know what is the reason u want to do this?

Yes, since first house have higher interest rate, I lump all my extra money to the first house but indirectly the taxible rental income will become higher.
2nd house will have negative rental income and if I can put both together and balance it up, it can reduce my tax.
So is it valid move?

sorry, i little bit confuse on your statement in red.
i dont think high interest rate could contribute to higher taxable income.

let me confirm on these:
1) your first house monthly commitment is low because u dump all extra money,
2) your first house monthly rental profit "seems to be high"
3) your first house taxable income become more

so u want to declare lower income for 2nd house to balance it.
am I correct?

Yes, you are totally right :-)

If its correct, then the answer is yes you can combine both account. But for LHDN submission, maybe u should consider a reliable auditor or secretary for that.

For the 2nd house (room rental out), could I include the whole bank loan interest or partially based on rented size? Do you know how is the calculation would be?

If its me, I just consider master bed room is vacant.
Stil, your profit is:
Income - monthly installment = profit

Tax is based on profit, doesn't matter u rent it as whole or partial.

Thanks

Since you all are in this discussion, pardon me to interrupt this conversation as well. I have actually just posted regarding income tax from home loan.

https://forum.lowyat.net/topic/3732400

Looking at this thread, does it mean my rental income tax will be based on after deduction of monthly loan installment repayment to the bank?

Thanks for the advise

I believe it is only the interest.

For those wondering, the above link leads to this link:
http://www.hasil.gov.my/pdf/pdfam/PR4_2011.pdf

And the related part is:

8.2
Expense which is allowed a deduction from income of letting of real property
charged to tax ....

(b)
Interest on loan
Interest paid on loan taken to finance the purchase of real property which is rented out

So meaning if i have 2 property, 1 profit 1 loss can combine??? (cos i heard cannot, loss one zero, profit have to declare for the other one)