Buying Malaysian property from India: the complete guide

Malaysia is increasingly on the shortlist for Indian families looking to hold property outside India: English-language contracts, freehold titles, a long-established Indian community and flights of four to six hours from most major Indian cities. But buying from India is different from buying from anywhere else, because Indian foreign-exchange rules decide how you can pay — and those rules catch many buyers out.

Is Malaysia a good fit for Indian buyers?

• Ownership: foreigners can hold freehold and leasehold titles in their own name, above each state’s minimum price.
• Language and law: sale agreements and titles are in English or Malay, under a common-law system familiar to Indian lawyers.
• Community: a long-established Indian community, Indian food, temples and Tamil-medium schools — especially around Kuala Lumpur and Johor Bahru.
• Access: Indian passport holders can visit Malaysia visa-free for up to 30 days (currently valid until 31 December 2026).

Where it is not a good fit: if you need a loan to buy, or you expect a quick resale. Foreigners pay 30% tax on gains within five years, and resale to other foreigners is limited by the same price floors you face.

Rule no. 1: you cannot borrow for it

This is the most important — and most misunderstood — rule. Under India’s Foreign Exchange Management Act (FEMA), a resident Indian generally cannot take a foreign-currency loan from an overseas bank, and borrowing in India to fund property abroad is not permitted either. That means:

• No Malaysian bank mortgage for a resident Indian buyer
• No Indian home loan, personal loan or loan against shares to fund it
• No payment by credit card or cash

Acceptable sources are your own traceable funds: savings, fixed deposits, mutual fund or share sale proceeds, or the sale of other property.

How much you can send, and the TCS

Under the RBI’s Liberalised Remittance Scheme (LRS), each resident individual can send up to USD 250,000 per financial year (April to March) for all purposes combined, and buying property abroad is a permitted purpose. Family members can combine their limits for one property only if each of them is a co-owner on the title.

Your bank collects Tax Collected at Source (TCS) of 20% on the part of your LRS remittances above ₹10 lakh in a financial year (for purposes other than education or medical costs). TCS is credited against your income tax when you file, so it is not a permanent cost — but it is cash you will not see until then.

Example: remitting ₹2 crore in one financial year means TCS of 20% × (₹2 crore − ₹10 lakh) = ₹38 lakh held back until you file your return. Splitting payments across two financial years — possible with a new launch or a well-timed completion — can make a big difference to your cash flow.

Timing the Malaysian payments with your LRS

• Completed property (subsale): usually 10% on signing, and the balance within about three months of the agreement or state consent (often with a one-month extension). Most or all of this falls in one financial year.
• New launch (under construction): a booking fee and down payment, then progress payments as construction advances over several years. This spreads your remittances naturally across financial years.

What it really costs: a worked example

Here is a realistic estimate for a RM1,000,000 condominium in Johor Bahru bought by one resident Indian individual:

Also budget for monthly maintenance and sinking fund charges, yearly quit rent and assessment tax, insurance, and your bank’s exchange-rate margin — ask for a quoted rate before each transfer, as a 1–2% difference on a crore is real money.

Step by step: from India to handover

Owning it: tax and reporting in India

• Schedule FA every year. Resident taxpayers must declare foreign assets in Schedule FA of their ITR for every year they own them, whatever the value. Non-disclosure can attract a penalty of ₹10 lakh per year under the Black Money Act, plus tax and interest.
• Rent is taxable in both countries. In Malaysia, rental income of a non-resident is taxed there. In India it is taxed as income from house property (with the 30% standard deduction).
• No double taxation. Under the India–Malaysia tax treaty you can claim credit in India for Malaysian tax paid on the rent. File Form 67 with your return to claim it.
• Keep records of rent received, Malaysian tax paid, and every remittance — your CA will need them each year.

When you sell

• Malaysian tax first: as a non-citizen you pay real property gains tax of 30% of the gain if you sell within five years, and 10% from the sixth year.
• Indian tax next: the gain is also taxable in India as capital gains, with credit for the Malaysian tax under the treaty.
• No reinvestment exemption: India’s section 54-type exemptions for reinvesting in a house apply to houses in India, not abroad.
• Bring the money home: sale proceeds must be repatriated to India within the timeline set by the Overseas Investment rules.

Protecting it for your family

Malaysian land passes under Malaysian law, whatever your Indian will says. Because India is a Commonwealth country, an Indian grant of probate can be resealed by a Malaysian court — law firms estimate this takes around two to three months, after your family has first obtained the Indian grant.

A separate Malaysian will covering only your Malaysian assets is usually faster and simpler. It must be drafted to sit alongside your Indian will without revoking it. Remember too that co-owners in Malaysia generally hold defined shares — a share does not automatically pass to the surviving co-owner, so each co-owner needs a will.

Longer stays: visas and MM2H

Owning property does not give you the right to live in Malaysia. For visits, Indian nationals can currently enter visa-free for up to 30 days (until 31 December 2026). For long stays, the Malaysia My Second Home (MM2H) programme offers renewable passes in Silver, Gold and Platinum tiers, with a fixed deposit starting from USD 150,000 and a requirement to buy property above a set price and hold it for ten years. MM2H deposits are also subject to LRS rules, so plan them together.

Checklist before you pay a booking fee

Frequently asked questions

Sources

• Matrix Forex — Buying property abroad under LRS (2026)
• Benhams — Can resident Indians buy property overseas on a mortgage? (FEMA)
• BookMyForex — TCS on LRS remittances after Budget 2026
• Business Standard — Non-disclosure of foreign property invites ₹10 lakh penalty per year
• India Law Offices — Foreign income and overseas assets: tax disclosure in India
• Income Tax Department — Form 67 (foreign tax credit)
• Business Standard — Malaysia extends visa exemption for Indians until December 2026
• KPMG Malaysia — Budget 2026: stamp duty
• LHDN — RPGT rates
• The Star — Johor to raise levy on property bought by foreign interests
• Mondaq — Resealing letters of representation in Malaysia
• Alter Domus — MM2H requirements

Rules, rates and bank policies change. This guide is general information checked on 24 September 2026. It is not legal, tax or financial advice — confirm your own position with a lawyer and a tax adviser in both countries.

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