KUALA LUMPUR (Oct 18): The government on Friday announced an individual income tax relief of up to RM7,000 for three years on the interest payments of residential home loans for first-time homebuyers.

Prime Minister Datuk Seri Anwar Ibrahim, who announced the tax relief when tabling Budget 2025 in Dewan Rakyat, said it was aimed at encouraging the purchase of a first residential home among Malaysians and to increase their disposable income.

The incentive allows for a total tax relief of RM7,000 per year for homes worth up to RM500,000, and up to RM5,000 for houses priced between RM500,000 and RM750,000.

The individual income tax relief is applicable for three consecutive years of assessment, commencing from the first year the housing loan interest is paid.

The conditions imposed are that the residential home must not be used to generate any income and that the sales and purchase agreement must be executed from Jan 1, 2025 until Dec 31, 2027.

The income tax relief announced in Budget 2025 is lower than a similar tax relief announced 15 years ago in Budget 2009.

Under Budget 2009, the then government announced individual income tax relief of up to RM10,000 per year, also for three years, on housing loan interest payments.

The incentive then did not specify that it would only apply to first-time homebuyers, and was limited to one residential property. It was also only applicable for a shorter period of time, whereby the sale and purchase agreement must have been signed between March 10, 2009 to Dec 31, 2010.

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