If your assignment is less than 5 years, the math usually says rent. If it is longer, the math gets interesting. The conventional wisdom — "buying is always better than renting" — collapses when you add foreigner stamp duty at 8%, RPGT at 30% for the first five years, and the opportunity cost of a 40% downpayment locked in Malaysian ringgit. Most expat "should I buy?" decisions are made on gut feeling and advice from property agents who earn commission on sales. This guide replaces gut feeling with a spreadsheet.
The Break-Even Framework
The rent-vs-buy decision for expats is a total cost comparison over your expected stay in Malaysia. You need to account for every cost on both sides — not just rent versus mortgage payment. Before diving into the numbers, confirm your target property meets the foreigner minimum price threshold and check eligibility with our foreigner eligibility checker.
Costs of Buying (Entry)
| Cost Item | Typical Amount | Notes |
|---|---|---|
| Stamp duty | 8% of purchase price (from 2026) | Flat rate for foreigners on residential property; was 4% prior to 2026 |
| Legal fees (SPA) | ~1% of purchase price | Governed by scale fees |
| Legal fees (loan agreement) | ~0.8% of purchase price | If financing |
| Valuation fee | RM2,000-5,000 | Bank-appointed valuer |
| State consent fee | 1-2% of purchase price | Varies by state |
| Agent commission | 0% (typically) | Seller usually pays for sub-sale |
| Total entry costs | ~11-12% | Before downpayment |
Costs of Buying (Holding — Annual)
| Cost Item | Typical Amount | Notes |
|---|---|---|
| Maintenance fee | RM3,600-12,000/year | Depends on condo size and management |
| Assessment (cukai taksiran) | RM1,000-3,000/year | Local council tax |
| Quit rent (cukai tanah) | RM100-500/year | State land tax |
| Insurance | RM1,200-2,400/year | Fire + homeowner |
| Repairs/maintenance | ~1% of property value/year | Budget for long-term average |
| Mortgage interest | Varies | Only the interest portion is a cost; principal repayment builds equity |
Costs of Buying (Exit)
| Cost Item | Typical Amount | Notes |
|---|---|---|
| RPGT | 30% of gains (years 1-5) or 10% (year 6+) | Foreigner rates per Schedule 5 RPGT Act |
| Agent commission | 2-3% of sale price | Seller pays |
| Legal fees (sale) | ~0.5-1% of sale price | |
| Total exit costs | 3-4% + RPGT | RPGT can be the largest single cost |
Costs of Renting
| Cost Item | Typical Amount | Notes |
|---|---|---|
| Monthly rent | Market rate | Depends on location and property |
| Security deposit | 2 months rent (refundable) | Plus 0.5 months utility deposit |
| Stamp duty on tenancy | Nominal (RM100-500) | On the tenancy agreement |
| Agent fee | 0 (tenant typically does not pay) | Landlord pays in most KL transactions |
| Annual rent increase | 5-10% per renewal | Negotiable but typical in expat areas |
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Break-Even Analysis: RM1.5M Condo in KL
Let's model a specific scenario. You are an expat considering a RM1.5M condominium in a prime KL location — Mont Kiara, Bangsar, or KLCC fringe. The alternative is renting a comparable unit at RM5,000/month.
Assumptions
| Parameter | Value |
|---|---|
| Property price | RM1,500,000 |
| Comparable monthly rent | RM5,000 (increasing 5% annually) |
| Annual property appreciation | 3% |
| Foreigner stamp duty | 8% (RM120,000) |
| Total entry transaction costs | 11.5% (RM172,500) |
| Downpayment | 40% (RM600,000) — typical for foreigner with 60% LTV |
| Mortgage rate | 4.75% on RM900,000 over 25 years |
| Monthly mortgage payment | RM5,100 |
| Annual holding costs (maintenance, assessment, insurance, repairs) | RM22,000 |
| RPGT | 30% on gains (years 1-5), 10% (year 6+) |
| Exit costs (agent + legal) | 3.5% of sale price |
| Opportunity cost of downpayment | 5% annual return |
Cumulative Cost Comparison
This table shows total cost of each option at different time horizons. For buying, "total cost" includes all transaction costs, holding costs, mortgage interest, and opportunity cost — offset by equity buildup and appreciation. For renting, it is cumulative rent paid.
| Horizon | Total Cost: Renting | Total Cost: Buying | Net Advantage |
|---|---|---|---|
| 2 years | RM123,000 | RM412,000 | Rent wins by RM289,000 |
| 3 years | RM189,000 | RM385,000 | Rent wins by RM196,000 |
| 5 years | RM332,000 | RM310,000 | Buy wins by RM22,000 |
| 7 years | RM490,000 | RM195,000 | Buy wins by RM295,000 |
| 10 years | RM736,000 | RM12,000 | Buy wins by RM724,000 |
How to read this table: At the 2-year mark, you would have spent RM123,000 renting (24 months of escalating rent). Buying would have cost RM412,000 in net total costs after accounting for equity buildup, appreciation, and exit costs including 30% RPGT. Renting saves you RM289,000 over a 2-year hold.
By year 5, the numbers cross. The combination of equity buildup, 3% annual appreciation, and the RPGT drop from 30% to 10% (at year 6) tips the balance. By year 7, buying is substantially cheaper. By year 10, it is not even close.
The break-even point for a foreign buyer in KL is approximately 4.5-5 years. But this assumes 3% annual appreciation. At 0% appreciation, the break-even extends to 7-8 years. At 5% appreciation, it shortens to 3-4 years. Your appreciation assumption is the single most powerful variable in this model.
The RPGT Factor: Why Short Holds Are Punished
RPGT is the reason the break-even is so far out for foreigners. Citizens reach 0% RPGT after year 5. Foreigners never do — they drop from 30% to 10% at year 6, but 10% remains permanently.
RPGT Impact on a RM200K Gain
| Disposal Year | RPGT Rate (Foreigner) | RPGT Payable | Effective Monthly Cost of RPGT |
|---|---|---|---|
| Year 2 | 30% | RM60,000 | RM2,500/month (over 24 months) |
| Year 3 | 30% | RM60,000 | RM1,667/month (over 36 months) |
| Year 5 | 30% | RM60,000 | RM1,000/month (over 60 months) |
| Year 6 | 10% | RM20,000 | RM278/month (over 72 months) |
| Year 10 | 10% | RM20,000 | RM167/month (over 120 months) |
Selling after 3 years with a RM200,000 gain means paying RM60,000 in RPGT. That RM60,000 equals 12 months of RM5,000 rent. Put differently: the RPGT on a 3-year hold costs you a full year of rent. This single tax eliminates most of the financial advantage of buying for short-duration expat assignments.
The year 5 to year 6 cliff — dropping from 30% to 10% — is the most powerful threshold in the entire calculation. If you are anywhere near the 5-year mark, hold for one more year.
RM60,000 in RPGT on a 3-year hold equals 12 months of rent at RM5,000. The capital gains tax alone can wipe out the financial benefit of ownership for anyone leaving within 5 years.
When Buying Wins
Buying is financially superior when the following conditions are met:
1. You Plan to Stay 7+ Years
At 7 years, the math decisively favors buying under most reasonable appreciation assumptions. Transaction costs are amortized over a long period, RPGT drops to 10%, and equity buildup becomes substantial.
Profile: Senior expat executive with an indefinite assignment, entrepreneur building a Malaysian business, retiree who has committed to Malaysia long-term.
2. You Can Rent Out the Property After Leaving
If you buy, leave Malaysia after your assignment, and rent out the property rather than selling, you avoid triggering RPGT entirely (no disposal = no RPGT). The property becomes a passive income asset.
The math: RM1.5M property renting at RM5,500/month with a RM5,100 mortgage payment generates positive cashflow before tax. Over time, rental income rises while a fixed-rate Islamic financing payment stays constant. After the mortgage is paid off, it is pure income.
Caveat: You need a property manager (typically 8-10% of rental income), and as a non-resident your rental income tax is a flat 30% on net rental income (after allowable deductions but no personal reliefs) — which changes the cashflow calculation significantly. See our foreigner rental income tax guide for filing details and deductible expenses. See our rent vs mortgage break-even guide for state-by-state analysis.
3. The Rental Yield Covers the Mortgage
If monthly rent covers your mortgage payment plus holding costs, your effective housing cost is lower than renting. You live for "free" (your tenant pays your mortgage), build equity, and benefit from appreciation.
Threshold: For a RM1.5M property with 60% LTV at 4.75% over 25 years, you need at least RM5,600/month net rental income to break even on monthly costs. At RM5,000 rent as a tenant, you are paying less than this — which means renting is cheaper on a monthly basis. The buy advantage only emerges from equity buildup and appreciation over time.
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When Renting Wins
1. Assignment Under 5 Years
The numbers are unambiguous. For a 2-3 year assignment, the combination of 8% stamp duty, state consent fees, legal costs, and 30% RPGT makes buying financially irrational. You are paying 11-12% in entry costs and 30% of any gains on exit. No reasonable appreciation rate overcomes this drag within 3 years.
2. You Want Flexibility
Expat life is unpredictable. Assignments get extended, shortened, or relocated. A tenancy agreement gives you a 2-month notice exit. A property sale takes 3-6 months minimum, requires a buyer willing to pay your price, and incurs RPGT.
If there is any meaningful probability your assignment changes within 3 years, the option value of flexibility strongly favors renting.
3. You Cannot Meet the 30-40% Downpayment
Foreigners typically need 30-40% downpayment plus 11-12% in transaction costs. For a RM1.5M property, that is approximately RM770,000 in cash upfront. If deploying that capital to Malaysian property significantly constrains your other investments or emergency reserves, renting preserves financial flexibility.
Opportunity cost calculation: RM770,000 invested at 7% annual return (global equity index) generates approximately RM54,000/year or RM4,500/month. Renting at RM5,000/month costs only RM500/month more than the return on your invested downpayment. The effective cost of renting after accounting for investment returns is much lower than the headline rent.
4. You Are Uncertain About Malaysia Long-Term
Buying property is a commitment to a specific market, currency, and regulatory environment. Malaysian property rules change. Foreign ownership thresholds have been raised multiple times. RPGT rates have been revised. If you are unsure about Malaysia as a long-term base, renting keeps your options open.
The Tax Residency Angle
Tax residency changes the math on both sides — renting and buying — for expats who are physically present in Malaysia.
182-day rule: If you are physically present in Malaysia for 182 or more days in a calendar year, you qualify as a tax resident under LHDN rules. This applies regardless of your visa type (employment pass, MM2H, or other).
Impact on Rental Income (If You Buy and Rent Out Later)
| Status | Tax Treatment | Example: RM5,500/month Rent |
|---|---|---|
| Non-resident | 30% on net rental income (after allowable deductions, no personal reliefs) | RM19,800/year tax (on gross; less if deductions claimed) |
| Tax resident | Progressive 0-30% on net income (after deductions and personal reliefs) | ~RM6,000-10,000/year tax |
| Annual tax saving | ~RM10,000-14,000 |
The tax residency angle becomes critical when you leave Malaysia but keep the property. If you drop below 182 days, your rental income tax jumps from progressive rates (potentially 0-15% effective) to a flat 30% on net income without personal reliefs. This overnight increase in tax can turn a cashflow-positive property into a cashflow-negative one.
Planning point: If you plan to buy, hold, and eventually become a non-resident landlord, model your cashflow at the 30% non-resident rate from day one. If it still works, buy. If it only works at resident tax rates, you are taking a bet on your continued physical presence in Malaysia.
A Decision Framework
Instead of agonizing, answer five questions:
1. How long will you stay in Malaysia?
- Under 3 years: Rent. Not debatable.
- 3-5 years: Lean rent unless you plan to keep the property after leaving.
- 5-7 years: Marginal. Run the specific numbers for your target property.
- 7+ years: Lean buy.
2. Will you keep the property after leaving?
- Yes: Buying becomes more attractive. You avoid RPGT (no disposal) and earn rental income.
- No: You must factor in RPGT and exit costs.
3. Can you fund 50%+ of property value in cash?
- Yes: Proceed with the analysis.
- No: Rent. Stretching for a downpayment as a foreigner in a foreign market is poor risk management.
4. Does the rental yield cover the mortgage?
- Yes: The property pays for itself. Buying is stronger.
- No: You are subsidizing the mortgage from your salary. Acceptable if you view it as forced savings, but the cashflow is negative.
5. What is your tax residency plan?
- Will remain 182+ days: Progressive tax rates support positive cashflow.
- Will drop below 182 days: Model at 30% flat rate.
| Your Answers | Recommendation |
|---|---|
| Under 5 years, selling on exit | Rent |
| Under 5 years, keeping property | Depends on cashflow at non-resident tax rate |
| 5-7 years, keeping property | Likely buy |
| 7+ years, any plan | Buy |
| Cannot fund 50% cash | Rent regardless of duration |
The Hybrid Strategy
Some expats rent where they want to live and buy where the numbers work.
Example: You rent a RM6,000/month unit in Mont Kiara (your preferred lifestyle location). Simultaneously, you buy a RM1M unit in Cheras or Setapak that rents at RM3,500/month with a RM2,800 mortgage. The investment property generates positive cashflow. You get lifestyle flexibility from renting your home and investment returns from owning a separate asset.
This strategy works if:
- The investment property clears the foreigner minimum threshold
- Rental yield covers mortgage plus holding costs
- You have the capital for both rent and downpayment
- You plan to hold the investment property 6+ years (clearing the RPGT cliff)
For property-specific cashflow analysis, including foreigner financing scenarios, use our cashflow calculator.
Further Reading
- Can Foreigners Buy Property in Malaysia? — Full rules and restrictions
- RPGT Guide 2026 — Capital gains tax rates, exemptions, calculator
- Rental Income Tax Guide — Resident vs non-resident taxation
- Foreigner Financing Options — Bank terms and requirements
- Rent vs Mortgage Break-Even by State — State-level analysis
- Cashflow Calculator — Model your specific scenario