The 2025 budget introduced a targeted measure to help first-time buyers. Announced on 18 October 2024 and formalized in the Finance Bill on 19 November 2024, this change aims to ease monthly costs for new owners.
To qualify, buyers must sign the Sale and Purchase Agreement between 1 January 2025 and 31 December 2027. The property must be a primary residence and not used to earn rental income.
Only Malaysian citizens who are tax residents can claim the benefit for three consecutive years. Keep your purchase records, agreement and payment proofs ready in case LHDN requests them.
Understanding the criteria helps you plan finances and maximize income and expense management over the assessment years. This relief is part of broader reforms designed to support families and boost home ownership across the country.
Key Takeaways
- New relief targets first-time buyers with S&P dates from Jan 1, 2025 to Dec 31, 2027.
- Claim available for three consecutive years for resident citizens only.
- Property must be owner-occupied and not rented out.
- Keep loan agreement and purchase records for potential LHDN audit.
- The measure was announced Oct 18, 2024 and formalized Nov 19, 2024.
Understanding the New Housing Loan Interest Tax Relief Malaysia
This section explains who benefits, how much can be claimed, and the filing window.
The measure covers first-time buyers of one owner-occupied residential property. It applies to flats, apartments and condominiums with S&P executed between January 2025 and December 2027.
The concession spans three consecutive years of assessment, starting in the first year you pay qualifying interest. Joint owners may split the claim based on actual apportionment of payments.
- Properties up to RM500,000: annual claim of RM7,000 for three years.
- Properties RM500,001–RM750,000: annual claim of RM5,000 for three years.
- Only one residential property qualifies and it must not be used for business or rental.
“The intent is to ease early ownership costs and help young families enter the market.”
| Price Bracket (RM) | Annual Claim (RM) | Eligible Years |
|---|---|---|
| ≤ 500,000 | 7,000 | 3 consecutive assessment years |
| 500,001–750,000 | 5,000 | 3 consecutive assessment years |
| > 750,000 | Not eligible | — |
Eligibility Criteria for First-Time Homebuyers
Before claiming any benefit, confirm your status and ownership details.
Citizenship and residency
To qualify, individuals must be a Malaysian citizen and a tax resident. The tax authority will ask for proof of residency and identity.
Proof and timing
Your Sale and Purchase Agreement must be executed between 1 January 2025 and 31 December 2027. This agreement verifies the purchase and the assessment year when claims can start.
Ownership and use
You may claim for only one residential property. The home must be owner-occupied and not used to earn rental income.
- Flats, apartments and condominiums qualify if they meet the rules.
- Joint owners may split claims based on actual contributions to payments.
- Non-resident individuals are excluded from this program.
| Requirement | What to provide | Notes |
|---|---|---|
| Citizenship & residency | ID and residency proof | Only resident citizens qualify |
| First residential property | Sale & Purchase Agreement | S&P dated 01/01/2025–12/31/2027 |
| Usage | Declaration of owner-occupation | No rental or business use allowed |
“Keep records ready—LHDN may request proof to verify eligibility.”
How the Tax Relief Calculation Works
Begin by matching the purchase price in your Sale & Purchase Agreement to the correct bracket. The calculation uses the price shown in the agreement as the key determinant.
Properties priced up to RM500,000 qualify for an annual deduction capped at RM7,000 for each of three consecutive years. For purchases between RM500,001 and RM750,000, the cap is RM5,000 per year.
The deduction period starts in the first year you pay qualifying loan interest, so plan filings across those assessment years. Joint owners should apportion the total based on actual contributions and the interest statements from banks.
- Use your bank statement to confirm exact amounts when you file income tax.
- Ensure the property is owner-occupied and the purchase date falls in january 2025–December 2027 window.
- Keep records of contributions, payments, and fees to avoid discrepancies.
“Simple documentation and correct apportionment make claims straightforward.”
Important Conditions for Claiming Your Relief
Make sure the property is designated for owner-occupation only; generating revenue from it will disqualify the claim.
The rules are straightforward, but strict: the home must be your main residence and not used to earn income.
Restrictions on Rental Income
Any use of the property to generate rental income or to run a business immediately removes eligibility for the three-year claim period.
If you change the property to a rental during the assessment years, you must stop claiming the deduction at once. Continuing to claim after conversion risks an audit and penalties.
- One property only: The deduction applies to a single qualifying residence per individual.
- Document retention: Keep the Sale and Purchase Agreement and bank statements showing loan interest payments for LHDN review.
- Start of period: The three consecutive years begin in the year you make the first qualifying payment.
“Clear documentation and correct use of the property protect your claim and reduce the risk of disallowance.”
| Condition | Action to Take | Penalty Risk |
|---|---|---|
| Owner-occupied use | Declare and document residence | Disallowance if violated |
| No rental/business | Cease claims if converted | Audits and fines |
| Evidence kept | Retain S&P and statements | Required for verification |
Expanding Your Medical and Education Insurance Coverage
Starting in the year assessment 2025, the maximum deduction for qualifying health and education premiums increases to RM4,000.
This change lets you claim both conventional insurance and Takaful premiums for yourself, your spouse, or your child. Eligible plans include medical cards, hospitalisation, critical illness policies, and employer group plans paid by the taxpayer.
Education plans qualify only if the child is the named beneficiary. Riders on life policies are allowed, but note that only 60% of critical illness rider premiums bundled with life cover are claimable.
“The extra RM1,000 gives families more room to keep children covered and plan for medical treatment.”
- Cap raised from RM3,000 to RM4,000 from YA 2025.
- Includes conventional and Takaful contributions for eligible individuals.
- Keep insurance statements and receipts for annual filing.
| Plan Type | Who Covered | Claim Notes |
|---|---|---|
| Medical card / Hospitalisation | Self, spouse, child | Full premium eligible |
| Critical illness | Self, spouse, child | Rider portion: 60% if bundled with life |
| Education insurance | Child (named beneficiary) | Only named beneficiary qualifies |
Updates to Medical Expenses for Parents and Grandparents
Effective in year assessment 2025, the deduction rules now better support families who care for elderly relatives at home.
Coverage for parents
Parents continue to qualify for medical deductions under the expanded rules. You may claim costs for medical treatment, specialist care, and caregiver fees when the services come from registered clinics or hospitals.
The full medical check-up cap of RM1,000 now covers vaccinations for parents. Keep receipts and vaccination records to support any claim.
Inclusion of grandparents
Grandparents who are residents and dependents are newly included. This change allows taxpayers to claim similar medical expenses for both parents and grandparents.
The total allowable medical expenses deduction remains capped at RM10,000. That cap covers serious illness care, fertility procedures, mental health consultations, and equipment where applicable.
“These updates aim to ease the financial burden on families providing essential care for aging relatives.”
- Claims apply from YA 2025 onward.
- Services must be provided by registered facilities.
- Retain detailed receipts, treatment notes, and vaccination certificates for LHDN verification.
| Item | Maxed by cap | Notes |
|---|---|---|
| Full check-up & vaccinations | RM1,000 | Includes parents and resident grandparents |
| Medical expenses (treatment, carers) | Within RM10,000 total | Registered providers only |
| Serious illness & mental health fees | Within RM10,000 total | Keep specialist reports |
New Relief for Household Food Waste Composting Machines
From YA 2025, small home composting units qualify under the expanded equipment measure.
A new tax relief lets households claim part of the cost for countertop composting machines. The measure expands the prior EV charging and hire-purchase category to include devices that break down kitchen scraps into usable compost.
The maximum claim is up to RM2,500 and is available once every three years. This window runs from YA 2025 through YA 2027.
To qualify, the machine must be a purpose-built countertop or home appliance used only for non-business household composting. Keep the original purchase receipt and warranty to show the device is for personal use.
“This niche addition encourages sustainable living and cuts organic waste at the household level.”
Before you include the purchase in your filing, verify the model meets the criteria and retain proof of purchase and use. Small steps like this can reduce waste and offer modest savings on your annual filings.
| Item | Max Claim (RM) | Frequency |
|---|---|---|
| Countertop composting machine | 2,500 | Once every 3 years (YA 2025–YA 2027) |
| Eligible use | Household only | Non-business |
| Documentation | Receipt & warranty | Keep for assessment checks |
Changes to Sports Activity Tax Relief
The RM1,000 sports activity benefit is now broader and aims to get whole families moving.
The RM1,000 sports relief has been expanded to include expenses for resident parents starting in YA 2025. You can claim costs for yourself, your spouse, your child, and resident parents.
Eligible Sports Expenses
Claimable items include purchases of sports equipment like rackets, balls, and home gym gear. Facility rental and entry fees for courts, pools, and bowling centers also qualify.
Gym membership fees and registration fees for licensed competitions are allowed. Training fees paid to associations or clubs registered with the Sports Commissioner or the Companies Commission also qualify.
“Keep all receipts and registration documents to support claims during assessment.”
| Expense type | Who covered | Notes |
|---|---|---|
| Sports equipment | Self, spouse, child, parent | Rackets, balls, home gym gear; keep receipts |
| Facility rental / entry | Same as above | Badminton courts, pools, bowling centers |
| Memberships & training fees | Same as above | Licensed clubs and registered associations only |
Increased Relief for Individuals with Disabilities
The government has increased fixed deductions for registered persons with disabilities for YA 2025.
Registered OKU taxpayers and caregivers will benefit from higher, easier-to-claim amounts.
For year assessment 2025, a taxpayer with a registered disability can claim a fixed deduction of RM7,000. The allowance for a disabled spouse is now RM6,000, and for a disabled unmarried child it is RM8,000.
These are fixed amounts. You do not need to submit receipts for individual expenses. You must, however, hold current JKM registration for any person you claim.
- Fixed deduction for disabled taxpayer: RM7,000
- Disabled spouse deduction: RM6,000
- Disabled unmarried child deduction: RM8,000
“Ensure your JKM registration is valid to avoid delays when filing.”
| Category | Amount (RM) | Notes |
|---|---|---|
| Disabled taxpayer | 7,000 | JKM registration required |
| Disabled spouse | 6,000 | Fixed deduction, no receipts |
| Disabled child | 8,000 | Unmarried, JKM-registered |
Understanding the New Dividend Tax for Shareholders
From YA 2025, individual shareholders who collect substantial local dividends face a fresh levy on amounts above a set threshold.
Threshold for Dividend Income
A 2% charge applies to local dividend income that exceeds RM100,000 in a single year. The first RM100,000 of dividends stays untaxed to protect smaller investors.
Calculation Formula
The levy is worked into your overall assessment by combining chargeable income and statutory dividend income using a prescribed formula.
- Applies to resident and non-resident individual shareholders who receive dividends from resident companies.
- Companies must issue a certificate showing the gross dividends paid or credited in the year.
Exempted Dividend Types
Not all payouts are caught by this measure. Dividends sourced from foreign income, pioneer-status firms, and shipping companies with existing exemptions are excluded.
| Item | Notes |
|---|---|
| Threshold | RM100,000 per year |
| Rate | 2% on excess |
| Exemptions | Foreign-sourced, pioneer, shipping |
“If you receive significant local dividends, consult a tax professional to assess the impact on your net income.”
Extension of Key Tax Reliefs for Families
Several family-focused deductions have been extended to give parents more certainty when planning education and care costs.
Nursery and kindergarten fee support remains available through the year of assessment 2027. Parents can claim up to RM3,000 for qualifying early childhood fees. Keep receipts from registered providers when you file.
Net savings in the National Education Savings Scheme (SSPN) continue to be eligible for an allowance of up to RM8,000 until YA 2027. This helps with education planning and reduces taxable income for working families.
Contributions to the Private Retirement Scheme (PRS) and deferred annuities are now extended until YA 2030. These measures encourage steady saving for retirement while giving predictable benefits across several years.
“These extensions promote consistent saving and help parents manage annual expenses and future education costs.”
- Nursery/kindergarten fees: up to RM3,000 (extended to YA 2027)
- SSPN savings: up to RM8,000 (extended to YA 2027)
- PRS & deferred annuities: extensions through YA 2030
| Benefit | Cap (RM) | Valid Until |
|---|---|---|
| Nursery / Kindergarten fees | 3,000 | YA 2027 |
| SSPN education savings | 8,000 | YA 2027 |
| PRS & Deferred Annuities | Varies by plan | YA 2030 |
Keep contribution records and receipts. Confirm eligibility limits and the assessment year before you file your income tax return.
Employer Benefits for Elderly Care
From YA 2025, staff may receive a tax-exempt allowance when they support ageing parents or grandparents. This expands the previous childcare benefit so employees who are primary caregivers can get extra support.
Company Handbook Requirements
To claim this benefit, employers must document the provision clearly in a handbook or formal written policy. HR teams should state who qualifies, how the allowance is paid, and any supporting evidence required.
- The tax-free allowance now covers eldercare for parents or grandparents, not just child care for children aged 12 and below.
- Companies must update internal policies to show eligibility, limits, and proof needed for claims.
- Employees should confirm with HR whether the handbook has been updated before claiming the benefit on their income tax return.
- This change helps reduce caregiving expenses and supports working families juggling care and work.
“Formalising elderly care allowances gives employees breathing room and clearer, tax-efficient pay structures.”
| Item | Effective | Action |
|---|---|---|
| Allowance scope | YA 2025 | Include parents & grandparents |
| Employer duty | Immediate | Update handbook; publish guidance |
| Employee step | Each assessment year | Check HR and keep receipts |
Essential Tips for Successful Tax Filing
Organizing receipts throughout the year makes e-Filing much faster and more accurate.
Start with dates. e-Filing for the year assessment 2025 opened on 1 March 2026 via MyTax. Salaried taxpayers using Form BE should file by 30 April 2026, with a grace period to 15 May 2026. Business filers on Form B have until 30 June 2026, with a grace extension to 15 July 2026.
Keep all receipts, insurance statements, and supporting documents for at least seven years as required by LHDN. Missing proof during an audit can lead to disallowance of reliefs and penalties up to 100%.
Track key items all year: record medical expenses and sports equipment purchases, note any education or spouse claims, and save statements that show loan interest paid or purchase details.
“If your income includes dividends or multiple properties, consult a licensed tax agent or financial planner to avoid mistakes.”
- Verify eligibility for new reliefs before filing.
- Scan documents monthly to simplify e-Filing.
- Retain originals for potential LHDN checks.
Conclusion
These 2025 changes reshape how individuals plan purchases and manage annual filings. For claims tied to january 2025, check your documents and confirm the correct year assessment when you file.
Keep clear records. Track income and expenses, save proofs for your purchase, and note any spouse or dependent details. The expanded medical and sports measures and the extended family provisions through 2027 or 2030 give room to plan education and retirement savings.
Use the new tax reliefs wisely to lower your income tax burden across assessment years. If anything is unclear, seek professional advice to stay compliant and to maximise eligible deductions for the coming years.
