Quit Rent, Assessment and a Tax Checklist for Foreign Property Owners in Malaysia

Introduction

Foreign purchasers and foreign vendors of Malaysian property face different taxes. Purchasers pay stamp duty, while vendors may be subject to Real Property Gains Tax (“RPGT”) and the 7% retention sum. Both, however, need to deal with quit rent and assessment, the ongoing charges on the property itself.

This article explains quit rent and assessment, and ends with a summary table of the key taxes and costs for foreign purchasers and foreign vendors.

This article is the third in our series. For more detail on the taxes payable by each party, see Buying Property in Malaysia as a Foreigner: Stamp Duty and Costs and Selling Property in Malaysia as a Foreigner: RPGT and the 7% Retention Sum.

Quit Rent and Assessment

Although quit rent (cukai tanah) and assessment (cukai pintu/cukai taksiran) do not apply only to foreigners, foreign purchasers and vendors still need to know about them. They are charges on the property, required by law, that must be paid before or upon completion of the sale.

Quit rent is payable to the relevant State Authority under the National Land Code 2020, while assessment is payable to the relevant local authority under the Local Government Act 1976. As part of the conveyancing process, the vendor is generally required to settle all outstanding quit rent and assessment up to the completion date, with the purchaser assuming responsibility for these charges thereafter, subject to the apportionment provisions in the SPA.

For ease of reference, the table below summarises the differences between quit rent and assessment:

Item	Legal Basis	Relevance to Foreign Purchasers & Vendors
Quit Rent (Cukai Tanah)	National Land Code 2020 (Act 828) and the relevant State Land Rules	Payable by the registered proprietor to the State Authority. In a sale transaction, the vendor is usually responsible for settling all outstanding quit rent up to the completion date, while the purchaser is responsible thereafter (subject to SPA adjustments).
Assessment (Cukai Pintu/Cukai Taksiran)	Local Government Act 1976 (Act 171)	Payable to the local authority (e.g. DBKL, MBPJ, MBSA). Similarly, outstanding assessment is usually apportioned between the vendor and purchaser as at the completion date in accordance with the SPA.

Tax Checklist for Foreign Purchasers and Vendors

For ease of comparison, the table below summarises the key taxes, statutory payments, and transaction-related costs commonly encountered by foreign purchasers and foreign vendors in Malaysian property transactions.

Taxes Payable by Foreign Purchasers vs Foreign Vendors

Tax / Cost	Foreign Purchasers	Foreign Vendors
Stamp Duty on Memorandum of Transfer (MOT)	✔ Payable by the purchaser at a flat rate of 8% of the purchase price or market value (whichever is higher) for residential properties (effective 1 January 2026).	✘ Not applicable.
Stamp Duty on Loan Agreement	✔ Payable at 0.5% of the total loan amount (if financing is obtained from a Malaysian financial institution).	✘ Not applicable.
Real Property Gains Tax (RPGT)	✘ Not applicable.	✔ Payable by the vendor if the disposal of the property is subject to RPGT under the Real Property Gains Tax Act 1976. The applicable rate depends on the vendor’s holding period and tax residency status.
Retention Sum under Section 21B, RPGT Act 1976	✘ Not applicable.	✔ A statutory portion of 7% of the purchase price is retained by the purchaser or the purchaser’s solicitor and paid to the Director General of Inland Revenue (DGIR) on behalf of the foreign vendor as an advance payment towards any RPGT liability.
State Consent Fee	✔ Payable by the purchaser and included in the legal fees and disbursements.	✘ Not applicable.

Note: Legal fees, valuation fees, registration fees and other disbursements are transaction costs and are not taxes. These costs are typically borne by the party engaging the relevant professional or service provider.

Conclusion

Malaysia continues to welcome foreign investment in the property sector. However, foreign purchasers and vendors should understand the additional taxes and legal requirements applicable to them, as well as ongoing charges such as quit rent and assessment.

For foreign purchasers, the most notable recent development is the increase in stamp duty on residential property transfers from 4% to 8%, effective 1 January 2026. Foreign vendors, on the other hand, should keep in mind that they may have to pay RPGT and that when they sell, 7% of the purchase price must be held back by the purchaser’s solicitors and paid to the DGIR.

Because property rules, minimum purchase prices and consent requirements differ from state to state, foreign investors should get independent legal advice before entering into any property transaction.