Property assessment tax, also known as quit rent, varies among local authorities (PBTs) depending on the property value in a particular area and the estimated rental amount for each property type.
Areas that are focal points of development and densely populated, such as Petaling Jaya, Subang Jaya, and Shah Alam, generally have higher rates compared to areas like Sabak Bernam or Hulu Selangor.
Additionally, property types are categorized into various categories such as residential and commercial. Within the residential category, property types vary widely including terrace houses, semi-detached, townhouses, or apartments.
Property assessment tax is enforced under Section 127 of the Local Government Act 1976. It can be reassessed every five years or longer periods upon approval from the State Government.
According to written responses from the Selangor State Assembly in 2017, the Petaling Jaya City Council (MBPJ) imposed tax rates ranging from 5% to 8.8%, while the Shah Alam City Council (MBSA) ranged between 2% and 7.5%.
During the same year, the Kuala Langat District Council (MBKL) (previously known as MPK) imposed taxes ranging from 2.2% to 11.5%, Ampang Jaya Municipal Council (MPAJ) 1.1% to 7.15%, Subang Jaya Municipal Council (MBSJ) (formerly MPSJ) 2% to 8%, Selayang Municipal Council (MPS) 4% to 12%, and Kajang Municipal Council (MPKj) 2.2% to 11%.
Sepang Municipality used tax rates from 4% to 9.45%, while Kuala Langat and Hulu Selangor each used 1% to 14%, and Kuala Selangor Municipal Council (MPKS) (formerly MDKS) used 6% to 12%.
However, these 12 PBTs used old rates.
As announced by the EXCO for Local Government and Tourism, Dato’ Ng Suee Lim, on May 29, Selangor has set a maximum tax rate of 25% on property assessment tax across all PBTs.
The following schedule shows examples of calculating the annual property assessment tax for three property types including residential and buildings. The tax is calculated using an estimated gross annual rent.
This rental amount is determined by the Department of Assessment and Property Management of each local authority. The percentage tax rates are approved by the State Government after receiving proposals from PBTs.
The calculation method involves multiplying the estimated gross annual rent by the property assessment tax rate. The resulting amount is the tax payable by residents to the PBT each year. The calculation method is also the same for building assessment tax.
However, for vacant land, it is subject to the current market value. For example, if the land area is 5,000 square meters and the current market value per square meter is RM4,000, then the market value of the land is RM2 million.
If the property assessment tax rate for vacant land is 5%, RM2 million is multiplied by the applicable rate. The resulting property assessment tax payable is RM10,000.
Annual taxes may also differ for the same property category if the floor area has been modified or expanded.
