First-Home Loan Interest Tax Relief: Who Qualifies? SPA Must Be Signed by End-2027
Under LHDN's tax return notes, interest on a loan for a first home to live in is deductible: up to RM7,000 a year for homes priced up to RM500,000, and up to RM5,000 for homes above RM500,000 up to RM750,000, for three consecutive years of assessment. The sale and purchase agreement must be signed between 1 January 2025 and 31 December 2027, and the home must not generate income.
Official conditions
LHDN's Year of Assessment 2025 return notes (item H22) list the conditions: 1) it is the individual's first residential property, occupied as their residence and limited to one unit; 2) the sale and purchase agreement is executed on or after 1 January 2025 and not later than 31 December 2027; and 3) the individual derives no income from the property. The deduction runs for three consecutive years of assessment from the year interest is first paid, and the years cannot be chosen. Where two or more people claim for the same home, a formula apportions the deduction.
What LHDN's example shows
LHDN's example: a buyer's first home costs RM480,000 and interest payments begin in 2028; she can claim for 2028 to 2030, but not 2031, because the three years start from the year interest is first paid. For clients buying under-construction homes, when interest starts affects which years can be claimed.
Agent insight: letting the home disqualifies the claim
This is agent analysis. The deduction is for first-time buyers who live in the home. If a client plans to let it out or already owns another home, do not include the deduction in their budget. Remind clients that the SPA must be signed by 31 December 2027 to fall within scope; final eligibility and amounts should be confirmed with LHDN or a tax agent.
FAQ
Can joint owners both claim?
Yes, apportioned under LHDN's formula, within the limit for that home.
Does a RM800,000 home qualify?
No. The relief covers homes priced up to RM750,000.
An agent’s follow-up message
If this is your first home to live in and it costs up to RM500,000, you may deduct up to RM7,000 a year of loan interest for three years; the SPA must be signed by 31 December 2027 and the home must not be let. Please confirm final eligibility with LHDN or a tax agent. Shall I include this in your instalment budget?