Taxes and expenses when buying real estate in Indonesia

One of the most important factors when choosing a direction for investment in foreign real estate is a transparent, understandable and investor-friendly tax system.

Purchasing property in Indonesia can be attractive for foreign investors, but it is essential to consider all the taxes and expenses related to acquiring, owning, and selling property. 

Property prices in Bali vary significantly depending on the region and type of property:

Apartments: Prices for apartments can start from $75,000 and exceed $250,000.

Villas: Villa prices begin at $250,000 and can go over $2,000,000, depending on location and finish quality.

Average Price per Square Meter for a Fully Furnished Villa with Premium Finish:

• Canggu, Berawa, Umalas, Seminyak - 3,300
• Sanur - 2,250
• Bukit - 3,500
• Ubud - 2,500

Foreign nationals can acquire property in Indonesia only through long-term leases or rights to use the land, not full ownership of the land itself. When buying property, foreigners must consider the following taxes and fees:

• Transfer Tax: When purchasing property, buyers are required to pay a property transfer tax (BPHTB), which is 5% of the property’s value after deducting a non-taxable threshold set for each region

• Notary Fees and Legal Costs: These costs vary but generally range from 0.5% to 1.5% of the transaction value. The notary in Indonesia also serves as the government registrar, adding importance to their services
• Registration Fees: These include costs for document preparation and property registration, which depend on specific tariffs and can vary by region

Property owners in Indonesia are required to pay an annual property tax (PBB). The tax rate is approximately 0.1% of the cadastral value of the property.

But it can vary depending on location and property assessment

When selling property in Indonesia, owners are obligated to pay a capital gains tax (PPh). The tax rate is 2.5% of the selling price of the property.

This tax is levied on the gross profit from the sale and must be paid by the seller before or during the registration of the transaction.

• Utility Bills: Costs for electricity, water, gas, and waste collection. These expenses can vary depending on the size of the property and consumption levels
• Maintenance and Repairs: Includes regular maintenance, potential repairs, and improvements, as well as management fees if the property is part of a complex with shared facilities

• Management Fees: If the property is located in a residential complex, there may be additional fees for management services such as site cleaning and maintenance of common areas

Property owners renting out their property must pay a tax on rental income. The tax rate is 10% of the gross rental income.

This tax is levied on the income received from renting and must be declared and paid to the tax authorities.

Return on investment from renting out property in Indonesia can be quite attractive. Depending on the type of property, its location, and market conditions, rental yields can range from 5% to 10% per year.

High returns are typically seen in tourist areas and major cities where there is a steady demand for rental properties.