First Home Loan Interest Relief: First Home (YA 2025–2027)

What is the home loan interest relief?

This tax relief lets you claim the home loan interest you pay on your first residential home as a deduction from chargeable income. It is not a full deduction — it is subject to an annual cap and strict eligibility conditions.

Important: do not confuse the current scheme with old schemes. Malaysia has had three different home loan interest schemes. The one currently in force is the scheme under section 46B of the Income Tax Act 1967 (ITA 1967) for SPAs signed 1 January 2025 to 31 December 2027. The old schemes (s.46A and the SPA 2009–2010 scheme) have lapsed — they are explained at the end of this article as background.

Source: HASiL — Tax Reliefs (Individuals); Explanatory Notes Form BE YA 2025; Joint Memorandum on 2025 Budget Issues (see Official sources section).

Current relief (s.46B): RM7,000 / RM5,000 caps

The annual relief cap depends on the price of the residential home:

Residential home price	Annual relief cap
Up to RM500,000	RM7,000
Above RM500,000 up to RM750,000	RM5,000

You can claim this relief for 3 consecutive years of assessment starting from the year the interest is first paid. It only applies if the SPA is completed 1 January 2025 to 31 December 2027.

Simple example: You buy a first home worth RM450,000 and pay RM8,000 loan interest in the first year. Since the home price does not exceed RM500,000, your cap is RM7,000 — you claim RM7,000 (not RM8,000). If the interest paid is only RM5,000, you claim RM5,000 (the actual amount, as it is below the cap).

Source: HASiL — Tax Reliefs (Individuals), item 22; Explanatory Notes Form BE YA 2025, box G22; HASiL — Tax Relief Slides TT 2025 (see Official sources section).

Eligibility conditions

To claim relief under s.46B, all of the following conditions must be met:

The home is your first residential home.
The home is occupied as your place of residence.
You own only one unit of residential property.
The home does not generate income (e.g. is not rented out).
The SPA is completed 1 January 2025 to 31 December 2027.

Eligible: loans through LPPSA (Public Sector Housing Financing Board) are eligible. A person who previously owned only commercial property (not a residential home) is still considered a first-time home buyer.

Not eligible:

Home price above RM750,000.
Loans to buy land and build a house.
Previous ownership of residential property that had commercial status — for example SOHO, SOVO, SOFO or shop houses. HASiL interprets prior commercial ownership differently from residential ownership; if you have ever owned any commercial-status property, verify your position with HASiL or a tax advisor before claiming.
A home that generates rental income.

Source: HASiL — Joint Memorandum on 2025 Budget Issues (s.46B ITA, FAQ); Explanatory Notes Form BE YA 2025 (see Official sources section).

Proportion when more than one individual is eligible

If more than one individual is eligible to claim on the same home (e.g. siblings buying a home together) and the total interest exceeds the cap, each individual's share is calculated using the formula:

A × B ÷ C

A = the permitted amount (the RM7,000 or RM5,000 cap)
B = the interest incurred by that individual
C = the total interest incurred by all individuals

Simple example: Two individuals buy a first home worth RM450,000. Total annual interest is RM12,000, and Individual A pays RM6,000. A's share = 7,000 × 6,000 ÷ 12,000 = RM3,500. (This example only illustrates the formula — actual figures depend on your situation.)

Joint assessment (s.45(2) ITA): if a husband and wife are assessed jointly, the loan interest is deemed paid by the husband and wife respectively, and each claims according to their respective share.

Source: Explanatory Notes Form BE YA 2025; HASiL — Tax Reliefs (Individuals), Year of Assessment 2016 tab (equivalent formula); HASiL — Joint Memorandum on 2025 Budget Issues (see Official sources section).

Reporting in Form BE (box G22)

The claim is made in box G22 of Form BE (Explanatory Notes Form BE YA 2025), stating the 7,000/5,000 caps and conditions (i)–(iii). It also requires a Work Sheet and supporting evidence (e.g. loan statements, sale and purchase agreement).

Source: Explanatory Notes Form BE YA 2025 (box G22) (see Official sources section).

Lapsed old schemes (background)

Malaysia has had two other home loan interest schemes. Both have lapsed and can no longer be claimed:

1. The s.46A scheme (YA 2003–2005)

Deduction: RM5,000 (YA 2003), RM3,000 (YA 2004), RM2,000 (YA 2005).
SPA signed 1 June 2003 to 31 May 2004.
Home price between RM100,000 and RM180,000.
First home, bought from a housing developer, statutory body or cooperative.

2. The SPA 10 March 2009 – 31 December 2010 scheme

Deduction: RM10,000 per basis year, for 3 consecutive years of assessment starting from the date interest is first paid.
Resident citizen of Malaysia; one unit; home not rented out.

Source: HASiL — Interest Deduction on Loans (Section 46A ITA); HASiL — Tax Reliefs (Individuals), Year of Assessment 2016 tab, item 12 (see Official sources section).

Remember

The current scheme (s.46B) applies only to SPAs 1 January 2025 – 31 December 2027; old schemes have lapsed.
The RM7,000/RM5,000 caps are YA 2025 figures; HASiL has not published the YA 2026 tab this item still awaits official confirmation from HASiL — check again with HASiL before deciding.
"3 years" starts from the year the interest is first paid — not the SPA year.
First home means first residential home; prior commercial ownership (SOHO/SOVO/SOFO/shop house) is interpreted differently by HASiL.

Frequently Asked Questions (FAQ)

Q. How long can I claim this relief? A. 3 consecutive years of assessment, starting from the year interest is first paid, subject to other eligibility conditions.

Q. Are LPPSA loans eligible? A. Yes, loans through LPPSA are eligible.

Q. I previously owned a SOHO. Am I eligible? A. Not if the SOHO had commercial status — HASiL does not treat it as a first residential home. Verify your situation with HASiL or a tax advisor.

Q. My home price is RM800,000. Am I eligible? A. No — the relief only applies to homes up to RM750,000.

Q. I am assessed jointly with my spouse. How is the claim made? A. Under joint assessment (s.45(2)), the interest is deemed paid by the husband and wife respectively; each claims according to their respective share.

Glossary

Tax relief — a deduction from chargeable income that reduces the tax payable.
SPA — Sale and Purchase Agreement.
YA — Year of Assessment.
s.46B ITA — the provision of the Income Tax Act 1967 for the current home loan interest relief (SPA 2025–2027).
G22 — the box in Form BE for claiming this relief.
LPPSA — Public Sector Housing Financing Board.
SOHO/SOVO/SOFO — commercial properties (small office home office, small office virtual office, small office flexible office).