Sell or Rent Out Your Property in Malaysia? How to Run the Numbers and Decide

The right answer depends on three things: (1) How much capital you need right now — sale releases all equity immediately, rental releases it slowly. (2) Your RPGT position — selling within 5 years means paying 15–30% tax on gains; holding longer eliminates RPGT for citizens. (3) The rental yield vs expected capital growth — if yield is 4–5% and you expect 5–8% annual appreciation, holding makes more sense than selling at a 3% gain.

A gross rental yield of 4–6% is considered typical for urban condominiums in Malaysia. Below 3.5% and you are barely covering your mortgage plus maintenance costs. Above 6% is strong and usually found in commercial properties, industrial units, or areas with compressed prices relative to rentals. Compare your expected yield against the cost of capital (your mortgage rate) to see if renting generates positive cash flow.

For renting: (annual rent − annual expenses including mortgage, maintenance, assessment, insurance and repairs) = net annual cash flow. For selling: (sale price − outstanding loan − agent commission − RPGT − legal fees) = net sale proceeds. Compare the net sale proceeds against the present value of expected rental income plus future property appreciation over your investment horizon. If you will sell within 3 years anyway, selling now often beats renting.

Ongoing costs include: mortgage installments (if any), maintenance fees and sinking fund (for strata properties), quit rent (cukai tanah), assessment (cukai pintu), landlord insurance, agent or property management fees (8–10% of rent if outsourced), repair and maintenance costs (budget 1–2% of property value annually), and income tax on net rental income. Total holding costs excluding the mortgage typically run 2–4% of property value per year.

No. Renting out your property does not affect when your RPGT holding period started or ends. RPGT is based on the date of acquisition (SPA date for subsale, VP date for new launch) and the date of disposal (when you sell). The use of the property during the holding period — whether you live in it, rent it, or leave it vacant — does not change the RPGT calculation.

The Schedule 4 RPGT exemption applies to the disposal of a 'private residence.' If the property was rented out during your ownership and not your own residence, the exemption may not apply. The interpretation of 'private residence' under the RPGT Act depends on whether the property was primarily used as your personal residence. Consult a tax advisor or solicitor before assuming the exemption is available on a property you have been renting out.

Selling within the first 3 years attracts RPGT at 30% of gains for citizens. Selling in a buyer's market (oversupply, rising interest rates, poor sentiment) means lower prices and longer time on market. Selling a strata property with significant maintenance fee arrears adds complexity. Selling an over-leveraged property (high loan balance relative to current market value) may result in insufficient proceeds to fully redeem the loan, requiring you to top up in cash.