Old Office Buildings Turned Into Rental Homes Now Get a 10% Tax Deduction

A new Gazette published on 27 October 2026 gives Malaysian resident businesses a tax deduction for turning old, unused office buildings into residential homes for rent. The deduction is 10% of the qualifying renovation and conversion cost incurred between 1 January 2026 and 31 December 2027, capped at RM10 million in total, and applies from the 2026 year of assessment.

Not every building qualifies. The premise must have been used for administrative and office management activities for more than ten years and must no longer be in use. Shophouses are excluded.

Qualifying costs cover the actual conversion works, such as fixtures and fittings, flooring, electrical installation, wall covering and paint, fixed partitions, doors, windows, grills, false ceilings, and water, gas and air conditioning systems. Designer fees, professional fees and antique purchases do not count. The costs must also be certified by an external auditor.

Three conditions apply. The residential house development plan must be approved by the local authority, the property must be used only for people to live in with no part kept as office space, and it must be rented out after the conversion.

The deduction cannot be stacked. A business that has already claimed the same renovation cost as a normal business expense or through capital allowances cannot claim the 10% as well. As an example, a RM2 million conversion gives a deduction of RM200,000 against business income, so the choice between this deduction and capital allowances is worth working out before the claim is made.

If you wish to focus on running and growing your business, our CFO advisory team can take care of your accounting, payroll, tax planning, e-stamping, corporate secretarial and compliance matters for you. Feel free to WhatsApp us at 010-246 2151.