Foreign Property Ownership in Malaysia: Land Acquisition Tax and Real Property Gains Tax Explained

wwy
Mar 27
4 min read

Introduction

1. Foreign Property Ownership Policies

Non-Malaysian citizens or foreign companies looking to buy property in Malaysia, there are a few key regulations to keep in mind:

You’ll need approval under the amended National Land Code 2020, specifically Section 433B.
The state government sets minimum property price thresholds and restrictions on the types of properties foreigners can buy. (Check Table 1 below for details.)
Purchases must follow the Economic Planning Unit (EPU) Guidelines on the Acquisition of Properties, issued by the Prime Minister’s Department.

2. Who Counts as a Foreign Buyer?

Under Section 433A of the amended National Land Code 2020, a foreign buyer includes:

Non-Malaysian Citizens – Anyone who isn’t a Malaysian national.
Foreign Companies, which means:
1. A company registered in Malaysia as a foreign entity under the Companies Act 2016; or
2. A company registered in Malaysia where 50% or more of the voting shares are owned by non-Malaysian citizens.

Also, under Section 2 of the Companies Act 2016, a foreign company refers to:

A business, corporation, or association registered outside Malaysia; or
Any organization that, under its home country’s laws, can sue or be sued, and does not have its main office or principal place of business in Malaysia.

3. Property Purchase Approval & Minimum Price Requirement

Under Section 433B of the National Land Code 2020, non-Malaysian citizens or foreign companies looking to buy property in Malaysia must first submit a written application to the relevant state government for approval. Once the state government grants permission, buyers must comply with the terms and conditions set by the state and pay the required levy, unless the National Land Council grants an exemption.

The minimum property purchase price varies by state in Malaysia. For example:

State	Detached House/ Landed Property	Condominium/ Apartment
Johor	RM 2,000,000 (Designated International Zone - City Center Areas); RM 1,000,000 for strata-titled and landed properties in non-international zones (excluding Medini)	RM 1,000,000 (Non-International Zone - High-Rise Residential Properties)
Kedah	RM600,000	RM1,000,000（Pulau Pinang）
Kelantan	RM1,000,000	RM1,000,000
Melaka	RM1,000,000	RM500,000
Negeri Sembilan	RM1,000,000	RM600,000
Pahang	RM1,000,000	RM1,000,000
Penang – George Town	RM1,800,000	RM800,000
Penang - Butterworth	RM750,000	RM400,000
Perak	RM1,000,000	RM1,000,000
Perlis	RM500,000	RM500,000
Sabah	RM1,000,000	RM600,000
Sarawak	RM500,000	RM500,000
Selangor	❌（Not allowed to purchase landed property）	RM2,000,000（Strata Property Only）
Terengganu	RM1,000,000	RM1,000,000
WP Kuala Lumpur	RM1,000,000	RM1,000,000
WP Putrajaya	RM1,000,000	RM1,000,000

Table 1 (Data updated as of February 2025)

4. Government Incentives for Foreign Property Buyers

To attract foreign investors, the Malaysian government offers several incentives, including:

Malaysia My Second Home (MM2H) Program – Foreigners holding an MM2H visa enjoy a lower property purchase threshold and the ability to reside in Malaysia long-term.
Iskandar Malaysia Special Economic Zone – This economic zone provides stamp duty exemptions and property purchase incentives for foreign investors.
Malaysia Digital (MD) Initiative – Designed for foreign investors in the high-tech industry, this initiative may offer land purchase and property investment benefits.

5. Land Acquisition Taxes

5.1 Stamp Duty

Foreigners purchasing property in Malaysia are required to pay stamp duty under the Stamp Duty Act 1949. Stamp duty is charged at a flat rate of 4% on all property purchases, regardless of value. For example, if a property is purchased for RM 1.5 million, the stamp duty payable would be RM 60,000.

5.2 Quit Rent & Assessment Tax

After purchasing a property, owners must pay annual land taxes, including:

Quit Rent – Charged annually based on land area.
Assessment Tax – Paid biannually, calculated based on the estimated rental value of the property. The tax rate varies depending on the local authority.

6. Real Property Gains Tax (RPGT)

Foreigners selling property in Malaysia are subject to Real Property Gains Tax (RPGT) under the Real Property Gains Tax Act 1976. The tax rate depends on how long the property has been held:

Sold within 5 years → 30% tax
Sold after 6 years or more → 10% tax

RPGT is levied on capital gains, meaning the sale price minus the purchase price and associated costs.

Conclusion

With over two decades of legal expertise, Messrs. Woon Wee Yuen & Partners provides comprehensive legal solutions across Malaysia, operating from our offices in Johor and the Klang Valley.

We serve local and international clients with a steadfast commitment to excellence, integrity, and client-focused solutions.

Through our dedicated China Desk, we facilitate cross-border transactions and foreign investments, offering seamless legal support tailored to the needs of Chinese enterprises and individuals. As a trusted legal partner for banks, businesses, and individuals, we provide reliable, strategic, and results-driven legal services.

📚 Series: Legal Guide to Real Estate Investment in Malaysia (For Chinese Investors)

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