Last Updated on March 20, 2026 by Chin Yi Xuan
Investing in Malaysia R
EITs (eg. SunREIT, IGB REIT, YTL REIT) for passive income?
Here’s an important update that’ll likely impact your REIT dividends:
It’s official: No more preferential 10% withholding tax rate for REITs under the new LHDN guideline:
Table of Contents
📍 Before this:
Dividends from REITs:
No need to declare personal income tax, as the dividends are already deducted by the government with a 10% withholding tax before they reach our account.
➡️ New (2026):
Now, dividends from REITs have to be declared for personal income tax (kinda like rental income 🏠).
👉 What this means to you:
REIT investors earning RM50,000 or more in annual income, will be getting LESS dividend after tax deduction.
[Example]
(1) Jack earns RM120,000 in annual income.
(2) Dividend income from REITs: RM20,000
Total income: RM140,000
[🧮 Personal income tax calculation]
- First RM100,000: RM9,400
- Subsequent RM40,000 @ 25%: RM10,000
The tax rate for Jack’s RM20,000 REIT dividend = 25%, which translates to RM5,000.
📌 Comparison: How much is Jack getting in NET dividend?
RM18,000 (after deducting 10% withholding tax) vs RM15,000 (after deducting 25% personal income tax rate)
My 2 cents:
Definitely NOT ideal for most REIT investors. Not to mention the hassle of tracking the income from REITs.
But fundamentally, the underlying business of REITs remains the same. The crowd is still there for most malls managed by REITs, and the hospitality sector has been picking up since Covid.
But as a REIT investor, are you willing to go through the hassle under this new arrangement?
Let me know what you think in the comment section!
Disclaimer:
Not buy/sell advice. Do your due diligence before investing.
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