Inheritance and Estate Tax in Malaysia

Malaysia has not imposed any form of inheritance tax or estate duty since 1 November 1991, when the Estate Duty Enactment 1941 was repealed. There is also no gift tax. When a person dies owning property in Malaysia, no tax is levied on the transfer of that property to heirs. The estate must still pass through a legal administration process, and Real Property Gains Tax (RPGT) may become relevant if inherited real property is later sold.

Does Malaysia have an inheritance tax or estate duty?

No. The Estate Duty Enactment 1941 was fully repealed with effect from 1 November 1991, ending more than fifty years of estate duty in Malaysia. Before repeal, duty was charged at scale rates with 28 tax brackets; the highest rate of 10% applied to estates exceeding RM4 million in value. Annual revenue from the duty was modest -- between RM24 million and RM40 million per year, representing 0.04% to 0.5% of total tax collection. The government repealed the duty partly because compliance and administration costs were high relative to the revenue raised. Since 1991, Malaysia has imposed no inheritance tax, no estate duty, and no death tax of any kind. This remains the position as of 2026. See the Malaysia country overview for context on the broader tax framework.

How does Real Property Gains Tax apply to inherited property?

RPGT is the main tax consideration when a beneficiary later sells real property received from a deceased estate. LHDN (Lembaga Hasil Dalam Negeri Malaysia) sets out three relevant scenarios on its official guidance for transfer of assets inherited from a deceased estate.

First, the transfer of real property from the deceased to the executor or to a beneficiary by way of inheritance is treated as a disposal at a disposal price equal to the acquisition price -- meaning no chargeable gain arises and no RPGT is due on the inheritance event itself.

Second, when the beneficiary (or executor) eventually sells the property, RPGT is calculated on the gain from that later sale. The acquisition price used is the market value of the property at the date of death of the deceased (less allowable incidental costs under Schedule 2 of the Real Property Gains Tax Act 1976). This is a market-value reset at death, not a carry-over of the deceased's original purchase price.

Third, the holding period used to determine the RPGT rate runs from the date of transfer to the beneficiary (or, for an executor selling directly, from the date of death), not from the date the deceased originally acquired the property.

Current RPGT rates for Malaysian citizens (Part I of Schedule 5, effective 1 January 2022) are set out in the table below. A Malaysian citizen beneficiary who holds the inherited property for more than five years before selling pays 0% RPGT.

Source: LHDN RPGT Rates page (hasil.gov.my).

A beneficiary who receives a property valued at RM500,000 at the date of the deceased's death, then sells it six years later for RM700,000, would have a chargeable gain of RM200,000 and pay 0% RPGT as a Malaysian citizen, because the six-year holding threshold has been met. Holding periods shorter than five years trigger the rates in the table above.

How are non-Muslim estates administered in Malaysia?

Three institutions may administer a deceased person's estate in Malaysia: the High Court, the Small Estate Distribution Unit (Land Office), and Amanah Raya Berhad (the public trustee).

Where the deceased left a valid will, the named executor applies to the High Court for a Grant of Probate. The probate grants authority to gather assets, settle debts, and distribute the estate according to the will. Where there is no will (intestacy), the next of kin applies for Letters of Administration from the High Court or, for smaller estates, from the Land Office or Amanah Raya.

For non-Muslim intestacy, the Distribution Act 1958 governs who inherits and in what shares. Under that Act, where a surviving spouse and children all survive: the spouse receives one-third and the children share two-thirds. Where only a spouse and parents survive (no children): the spouse receives one-half and the parents share the remainder.

A "small estate" under the Small Estates (Distribution) Act 1955, as amended, means an estate not exceeding RM5 million in total value. Small estates with immovable property are processed through the District Land Office rather than the High Court. Amanah Raya handles estates consisting of movable property only where the total value does not exceed RM600,000 under the Public Trust Corporation Act 1995. Applications should be filed as soon as possible after death -- practitioners generally recommend within three months.

Administration costs include High Court filing fees, executor legal fees (typically 1 to 3% of estate value), and Amanah Raya's sliding-scale trustee fee (5% on the first RM25,000, declining to 1% on amounts above RM500,000). There is no estate duty or inheritance tax payable on top of these costs.

How are Muslim estates governed under faraid?

For Malaysian Muslims, inheritance is governed by faraid -- the Islamic law of fixed shares derived from the Quran and Sunnah. Faraid applies to the distribution of a Muslim's estate and is administered through state-level Shariah courts. Under Article 121(1A) of the Federal Constitution, civil courts do not have jurisdiction over matters within the Shariah court's jurisdiction for Muslims, which includes inheritance distribution.

Faraid allocates fixed, mandatory shares to defined heirs. A surviving widow receives one-eighth of the estate where children also survive, or one-quarter where there are no children. A surviving widower receives one-quarter where children survive, or one-half where there are no children. Parents each receive one-sixth where the deceased had children. Sons and daughters share the residual, with a son receiving twice the share of a daughter.

A Muslim may not dispose of more than one-third of the estate to non-heirs through a wasiat (Islamic will). The remaining two-thirds must follow faraid shares.

Hibah (a conditional or unconditional gift during the donor's lifetime) is a Shariah-compliant mechanism that allows a Muslim to transfer ownership of assets before death. Because hibah operates as a lifetime transfer, it falls outside the faraid distribution framework -- subject to Shariah court validation.

Has Malaysia ever proposed reintroducing inheritance tax?

Yes, periodically. Before the tabling of Malaysia's Budget 2025 in October 2024, media reports and government commentary raised the possibility of reintroducing inheritance tax as part of the Madani government's revenue-broadening agenda. The debate generated significant political opposition -- Sarawak DAP MPs publicly stated they would vote against such a measure on the grounds that it constituted double taxation on assets already subject to income tax. On 18 October 2024, the Finance Minister tabled the 2025 Budget: inheritance tax was not included. As of the date of this review (June 2026), Malaysia has no inheritance tax, and no enacted legislation exists to reintroduce one. Any future reintroduction would require new primary legislation through Parliament. Readers should monitor official announcements from the Ministry of Finance (MOF) and LHDN for any change.

A qualified tax professional with jurisdiction-specific credentials can help assess how Malaysian inheritance rules interact with your particular estate, especially where real property, cross-border assets, or Muslim estate distribution is involved.