Property Ownership and Tax

Indonesia is one of the most promising markets of developing countries in Asia. In this era of globalization, as a result, foreigners inevitably want to come to this country. Whether it is for investment or tourism purposes. Nowadays, foreigners can choose to invest in various types of sectors in Indonesia. The property sector is one of the large investment opportunities. To support Indonesia’s domestic economic growth and attract private foreign investors within the property sector, so the government set new requirements and procedures to allow foreigners to own property. Besides, Regulation No. 29 of 2016. In September 2016, regulations were issued procedures for granting, relinquishing, or transferring land rights over the houses of foreign residents in Indonesia.. To assist businessmen in understanding property ownership and tax. Hence, Indo-Ned Consultancy provides a service in regard to Property Ownership and Tax.

Property Rights in Indonesia for Foreigner

The three most relevant for foreign investors being the Right to Use (Hak Pakai), the Right to Build (Hak Guna Bangunan), and the Right to Own (Hak Milik).

 1. Hak Milik

Hak Milik is a freehold title that can only be held by Indonesian citizens. This title gives you the right to use your land in any way. However, it does not mean foreigners can capitalize natural resources under the land. Hak Milik title gives you the rights to sell, exchange, or use it as a mortgage. Currently, foreigners are not able to own freehold property in their names.

 2. Hak Pakai

As long as the property is not part of government-subsidized housing, foreigners are allowed to invest in commercial, residential real estate or property. However, because foreigners cannot actually own property as freehold title, a less risky and increasingly popular solution to the prohibition on foreign land ownership is a long-term leasehold agreement under the title of Hak Pakai (Right to Use). Leasehold titles are granted for 25 years and can be renewed for a maximum period of 80 years. Hak Pakai can be received from a person who owns the Hak Milik. By having a Hak Pakai title, you can construct a residential property on the land that is owned by the person having the Hak Milik title.

 3. Hak Guna Bangunan

Property owned by a foreigner may not be Hak Milik, but the Hak Guna Bangunan title is completely firm. Therefore, the safest way for a foreign national to invest in property is to do it through a foreign-owned limited liability company registered in Indonesia (PT PMA). PT PMA is enabling the foreigner to acquire the Right to Build (Hak Guna Bangunan) License and a Freehold Title/Right to Use (Hak Pakai). The Duration of Right is a maximum of 80 years, with an initial duration of 50 years that can be renewed for a further 30 years. The Hak Guna Bangunan title has effectively the same strength as a freehold title as long as the company continues to exist.

Property Ownership and Tax Transaction Costs

A land and building transfer duty are levied on the sale of property in Indonesia at a flat rate of 5%. The flat rate is charged to the seller. for transfers of simple houses and simple apartments by taxpayers engaged in property development, the tax rate is 1%. this tax must be paid by the time the rights to land and building are transferred to the transferee. The transfer tax is levied on the sale of property in Indonesia at a flat rate of 5% and is paid by the buyer. Luxury goods, including luxury houses, apartments, townhouses, and condominiums, are subject to a 20% sales tax.

Indo-Ned Consultancy is here to help with our professional advice and personalized service. With us, you can achieve your dream of property ownership in Indonesia. Should you need assistance and more information, feel free to contact us anytime.


The information provided here is based on our long experience. The process or requirement may vary depending on the specific facts and conditions. Besides, the law and regulations in Indonesia subject to frequent changes. Please contact us as your consultant to get an up to date information and accurate advice. More Information click here and You can also follow our social media accounts to see the latest information posts. please click on the following links: Facebook, Instagram, Linkedin, and Twitter.

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