Airbnb Income Tax Malaysia: What Hosts Need to Know

Is Your Airbnb Income Taxable in Malaysia?

Yes. Airbnb income is considered rental income and must be declared to LHDN (Lembaga Hasil Dalam Negeri). However, many hosts are confused about what's taxable, what's deductible, and how to report income correctly.

At iHousing, we've managed 100+ properties across 8 years. We've helped hundreds of owners understand their tax obligations while maximizing legitimate deductions. Here's what every Malaysian Airbnb host needs to know.

Understanding Your Tax Obligations

First, determine your tax status:

Host Type	Tax Treatment	Filing Requirement
Occasional host (1-2 properties,	Rental income added to other income	Form BE (individual)
Active host (2-5 properties, RM50k-150k/year)	Business income classification	Form B (individual with business)
Professional host (5+ properties, >RM150k/year)	Business income + possible SST registration	Form B + possibly register as sole proprietor/business

Key point: Even if you don't receive a tax form, you MUST declare all Airbnb income. LHDN cross-references with bank deposits and platform data.

What Income Must Be Declared?

Gross Rental Income

You must declare the FULL amount received from guests, including:

• Base rental rates - All nightly/weekly rates charged
• Cleaning fees - Even if paid to cleaners separately
• Extra guest fees - Additional person charges
• Late check-out fees - Any extra charges collected
• Security deposits kept - If you retain any portion

What About Platform Fees?

Airbnb service fees (typically 3% for hosts) are NOT deductible from your gross income. You declare the full amount received, then claim expenses separately.

Scenario	Guest Pays	You Receive	Declare
RM300/night listing	RM300 + Airbnb fee	RM291 (after 3% host fee)	RM291
RM300/night + RM50 cleaning	RM350 + fees	RM339.50	RM339.50

Allowable Deductions (What You Can Claim)

LHDN allows deductions for expenses "wholly and exclusively" incurred in producing rental income. Here's what most hosts can claim:

Operating Expenses (Fully Deductible)

Expense	Deduction Type	Documentation Required
Rates & assessment (Quit rent, assessment tax)	100% deductible	Official receipts
Insurance (Property, fire, liability)	100% deductible	Insurance policy & receipts
Repairs & maintenance (NOT improvements)	100% deductible	Invoices & receipts
Cleaning & laundry	100% deductible	Cleaning service invoices or supply receipts
Utilities (Electricity, water, internet)	100% deductible	Monthly bills
Airbnb management fees (Like iHousing's RM200-300/month)	100% deductible	Management agreement & invoices
Advertising & marketing	100% deductible	Platform fees, ad receipts
Consumables (Toiletries, basics)	100% deductible	Purchase receipts

Capital Allowances (Depreciation)

For furniture, equipment, and renovations, claim capital allowances instead of full expense:

Asset	Annual Allowance	Example (RM10k asset)
Furniture & fittings	10% per year	RM1,000/year deduction
Air-conditioners	20% per year	RM2,000/year deduction
Computers & electronics	40% per year	RM4,000/year deduction
Motor vehicles	20% per year (max RM3k/year)	RM3,000/year max

What You CANNOT Deduct

Common mistakes hosts make:

• Personal expenses: Even if you occasionally use the property, you can't claim personal-use portions
• Capital improvements: Renovations that ADD value (new roof, extension) aren't immediately deductible—these go into capital allowances
• Fines & penalties: Late payment penalties, traffic fines (even if business-related)
• Personal travel: Even if you're "checking" on the property, flights/transport aren't deductible
• Home office: Unless your Airbnb operations are run from a dedicated business space (not applicable for most)

Tax Calculation Example

Here's how a typical Melaka condo's Airbnb income gets taxed:

Item	Amount
Gross Rental Income
Total Airbnb revenue (20 nights × RM250)	RM5,000
Less: Allowable Deductions
Assessment tax & quit rent	(RM150)
Insurance	(RM80)
Utilities (electricity, water, WiFi)	(RM350)
Repairs & maintenance	(RM200)
Cleaning & laundry	(RM300)
iHousing management fee	(RM250)
Consumables replacement	(RM150)
Net Statutory Income	RM3,520
Tax rate (assuming RM50k-100k bracket)	13%
Tax payable	RM458

Key insight: Proper deductions can reduce your taxable income by 30-40%. Keep all receipts!

Record-Keeping Requirements

LHDN requires you keep records for at least 7 years. Maintain:

Essential Documents

1. Monthly income statements: Download from Airbnb host dashboard
2. Expense receipts: All business-related purchases (organized by category)
3. Bank statements: Showing all Airbnb deposits and business expenses
4. Management agreements: Your contract with iHousing or other managers
5. Utility bills: Proportionate to rental period (if not full-time Airbnb)
6. Property tax receipts: Quit rent and assessment tax payments
7. Insurance policies: Property coverage documents

Pro Tips for Organization

• Separate bank account: Dedicated account for all Airbnb transactions
• Cloud storage: Scan all receipts and store in Google Drive/Dropbox with folders by year
• Spreadsheet tracking: Monthly log of income and expenses (iHousing provides this for our clients)
• Accountant software: QuickBooks or Xero for automated tracking

RPGT (Real Property Gains Tax) Considerations

When you SELL an Airbnb property, RPGT applies:

Holding Period	Individual (Citizen/PR)	Individual (Non-Citizen)
Within 3 years	30%	30%
4th year	20%	30%
5th year	15%	10%
6th year onwards	0%	5%

Important: RPGT is on the NET gain (selling price minus purchase price, renovation costs, legal fees, etc.)

Special Scenarios

Part-Time vs Full-Time Rentals

If you rent your property part-time (sometimes live there, sometimes Airbnb), you can only claim deductions for the rental portion:

Usage Pattern	Deduction Allowed
Rented 15 nights/year (personal use rest)	15/365 of expenses = 4.1%
Rented 150 nights/year	150/365 of expenses = 41%
Rented 300 nights/year (full-time)	100% of expenses

Multiple Properties

Each property's income and expenses are calculated separately. You can't use losses from one property to offset gains from another EXCEPT if you're registered as a business.

Common Mistakes to Avoid

1. Not declaring all income: LHDN cross-checks with bank deposits. Penalties for under-declaration are severe (up to 300% of tax underpaid).
2. Claiming personal expenses: Mixing personal and business expenses triggers audits.
3. No receipts: Claims without proper documentation are disallowed.
4. Wrong category: Classifying capital improvements as repairs (improvements must be depreciated).
5. Late filing: Late payment penalties accrue monthly.

How iHousing Helps With Tax Compliance

We're not tax advisors, but iHousing makes tax season easier:

• Monthly income reports: Clear breakdown of all rental income
• Expense documentation: Invoices for management fees, cleaning, maintenance
• Capital allowance tracking: Records of furniture/equipment purchases
• Platform consistency: Professional bookkeeping across all 5 platforms (Airbnb, Booking.com, Agoda, VRBO, Expedia)

Our flat RM200-300/month management fee is 100% deductible—no surprise commission calculations.

When to Consult a Tax Professional

We recommend seeing a tax professional if:

• Your annual Airbnb income exceeds RM50,000
• You have multiple properties
• You're unsure about capital allowances vs repairs
• You're planning to sell an Airbnb property
• You've received a tax inquiry letter

Take Action: Stay Compliant, Maximize Returns

Airbnb hosting is a legitimate business in Malaysia. Declare your income, claim your deductions, and sleep easy at night knowing you're 100% compliant.

iHousing-managed properties receive comprehensive monthly statements perfect for tax filing. We organize everything so your accountant (or you) can file in minutes, not hours.

For Parkland Avenue by the Sea: Pre-register now to lock in RM200-300/month flat fee pricing. All our fees are fully documented for tax purposes.

For your existing property: WhatsApp us at +60166996688 to learn how iHousing can help maximize your Airbnb income while staying fully tax-compliant.

Don't let tax confusion hold you back from Airbnb investment. We'll connect you with our recommended tax professionals who specialize in short-term rental properties.