
The Income Tax Relief on Housing Loan Interest for First-Time Home Buyers in Malaysia is a significant tax incentive introduced in the 2025 Budget to encourage first-time homeownership. This relief is exclusively available to individuals purchasing their first residential property, meaning they must not have previously owned any residential property. It applies to homes priced at RM750,000 or below, with properties exceeding this amount being ineligible. The relief specifically covers the interest portion of housing loan payments.
Eligibility Criteria
For homes priced below RM500,000, you can claim a tax relief of up to RM7,000 per year. For homes priced between RM500,000 and RM750,000, the tax relief is capped at RM5,000 per year. The relief is applicable for the first three consecutive years of your housing loan interest payments, allowing claims for a maximum of three years.
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The property must be used solely for residential purposes and not for income-generating activities such as renting it out. Additionally, the Sale and Purchase Agreement (SPA) for the property must be signed and completed between January 1, 2025, and December 31, 2027. If two or more individuals jointly purchase the property, they can each claim a portion of the relief based on their share of the interest payments.
Making Homeownership in Malaysia More Attainable
This relief supports first-time homebuyers by directly reducing their taxable income, leading to lower tax payments and increased disposable income for other essential financial needs. It also encourages homeownership by making home purchases more affordable and accessible for first-time buyers. In turn, this initiative helps stimulate the property market, contributing to overall economic growth.
Step-by-Step Guide to Claiming the First-Time Homebuyers Tax Relief
Follow these steps to successfully claim the housing loan interest tax relief:
Step 1: Filing your income tax return:
- Include details of your housing loan interest payments when you file your annual tax return
- Specify the relief amount you are claiming.
Step 2: Prepare the necessary documents:
- Ensure you have the necessary documents, such as your loan agreement and Sale and Purchase Agreeement (SPA), to support your claim.
Step 3: Important considerations:
- The relief amount is subject to your overall taxable income.
- If your taxable income is below a certain threshold, the benefit may be limited.
Step 4: Seek professional help:
- Consulting a tax professional or accountant can help provide more personalized advice and maximize your benefits.
First-Time Homebuyers Tax Relief FAQs
Here are answers to some frequently asked questions and useful tips:
Can I claim relief if I refinance my home loan?
No, the relief is only applicable to the initial housing loan taken for your first home purchase.
What happens if the property is sold within three years?
If you sell the property within the relief period, you may no longer be eligible to claim the remaining relief.
How can I ensure that I maximise this tax relief?
Plan your home purchase timing to align with the eligible period (2025-2027). Ensure all required documentation is complete and accurate when filing your tax returns.
By understanding the eligibility criteria, relief amounts, conditions, and claiming process, you can effectively utilize this tax incentive to make your homeownership journey more financially manageable.