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Variants of obtaining a real estate property in Indonesia by foreigners.


According to the laws of Indonesia, foreigners cannot own land in Indonesia as we used to consider this term - unconditional ownership rights; they have only the right to rent it (though it is considered as ownership too).

Thousands of foreigners own real estate property in Indonesia for decades, sell/buy/rent it using various schemes that are more or less comply with the current regulation.


  • Hak Pakai “right to use”

The foreigner receives a certificate with his name printed in it, registered by state authorities, gives a foreign citizen the exclusive right to use the land / house, guaranteed by the laws of Indonesia.

If a foreigner is acquiring Hak Pakai rights from an Indonesian individual with Hak Milik rights on the land, the foreigner may have the rights for up to a total of 80 years (30 years initial term + 20 years extention + 30 years renewal).

If the foreigner is acquiring the Hak Pakai rights from any entity / individual with Hak Gunan Bangunan rights on the land, the foreigner may have the rights for the remaining duration of the HGB rights plus another maximum of 50 years (20 years extention + 30 years renewal). 

This right is granted to a foreign citizen only for one unit of real estate, the size of the land, which cannot exceed 1500-2000 sqm (depends on the area). There is also a minimum price limit for the property that can be purchased under Hak Pakai. For Bali area its Rp 2 bln for apartments and Rp.5 bln for houses. In Jakarta the limits are set as Rp 3 and Rp 10 bln accordingly.

In order to arrange real estate in this way, the buyer must have a work visa / residence permit.

In connection with the latest amendments to the legislation, this type of ownership of real estate is convenient only in the case of permanent residence in the country.

In the case of relocation from Indonesia, it is necessary to transfer the rights to another person (a foreigner who holds a work visa or resident) within one year; otherwise the state reserves the right to withdraw property without compensation. This clause of regulation can be complied if you would pay yearly fee for having work permit/ temporary residency (about $2500)

All land related transactions must be concluded in the Indonesian notarial office, Pejabat Pembuat Akta Tanah (PPAT), where the land to be acquired is located.


  • Hak Sewa - “leasehold”

Ordinary lease agreement between the owner (citizen of RI) and the investor (foreigner).

Lease agreements can be notarized or confirmed by two witnesses, but they are not registered with the relevant authorities, which differ from the previous options.

No time limit is set in case you decide to leasehold it even for 100% year, but agreement should include inheritance rights and obligations.

If you decide to confirm leasehold agreement with notary – each notary can set his own terms of leasehold validity and probably you will need to divide 100 years leasehold into several agreements following each other.


Take note that leasehold agreement contains clause regulating the need for the landlord to pay tax on income received by the lessor is set forth in the lease agreement. If this item is not settled in writing, a situation may arise that the tax inspectorate will come to the landlord, and it will require additional payments for the payment of taxes from the tenant.

  • Hak Guna - “right to build”

This option of owing the real estate provided only to legal entities - companies registered in the country, regardless of the form of legal entity.

This form allows building and owning a variety of real estate. This right is given to the company for a period of 30 years, with the possibility of prolongation up to 80 years.

With this right, the company can sell land and constructed houses on it to Indonesians or lease it to foreigners.

This can be done through Penanaman Modal Asing (PMA) – company with foreign ownership


  • Hak Milik - "unconditional right to property” or “freehold”

Under Indonesian law, only citizens of Indonesia may hold a Hak Milik status of land ownership.

Nuances in the acquisition of land that depend on the place where the property is located:


  • Permission to use the public village road must be signed by all households on this road (they once built it for their money and this is their road, the lack of this document with the signatures of neighbors is fraught with additional expenses)

  • if you buy land it is better to get acquainted with the neighbors immediately and tell what you are planning to build - their signature will be necessary to apply for a building permit

  • you need to measure the ground yourself and make sure that the dimensions match the ones indicated in the certificate (if it differs match, but you need this land, get ready that the renewal of the certificate will take up to a year)

  • it is better to get to know the head of the village right away and find out the conditions for obtaining his signature on the application for a building permit

  • find out about the land burden - whether you need to make some contributions to the village community (to Banjar), when, how much (for example, once a year to buy a bag of rice to the community or to pay some amount of money)


About taxation

In Indonesia, there are several levels of taxation: central government taxes, local taxes and income tax.

The tax system of the country takes into account the fact that it is mainly the poor who live here, who are more exempt from paying taxes at the expense of more solvent citizens.

It follows that people whose income is less than 50 million rupees are exempt from paying taxes, and those whose income is 50-250 million rupees pay a tax of 5%, whose incomes 250-500 million - 15% if 500+ million rupees - the tax is 30%. Married couples, by law, pay a single, joint tax.


Persons who are not citizens of Indonesia are charged with a so-called tax on income received in Indonesia (this also includes income received as a result of renting housing for rent).

Also transfer of property is subject to taxation.

Capital gains tax equal to 20% of the total sale value of the object.

Corporate Income tax:

Standard rate 25%

Public company with at least 40% of its shares traded on the Indonesia Stock Exchange 20%

Small companies with an annual turnover of less than 50 billion IDR 12.5%

Small companies with an annual turnover less than 4,8 billion IDR 1%


Property tax in Indonesia is 0.5% of the estimated value of the object.

The land and construction tax is paid annually and is administered by the local offices of the Directorate General of Taxes (Direktorat Jenderal Pajak, Kementerian Keuangan Republik Indonesia).

Prices vary depending on the region, but usually from 0.1% to 0.2% of the value of the property.

Taxes are revalued every three years, with the exception of fast-growing areas where revaluations take place every year. Residences worth more than one billion rupees are taxed at the top of the tax scale (0.2 percent).

When a piece of land changes its owner, the seller must pay 3% of its value, the buyer must pay 5% of its value.


VAT applies for rent:

Residential - 10%

Commercial - 6


Taxes and fees:

Change of ownership in the land certificate, change period 3-6 months

Buyer pays 5%, seller pays 3%

Payment of notarial / legal services 1–2 % paid by buyer

Registration fee 0,2 % paid by seller

Fee to real estate agent 5 % paid by seller

Lease of land - according to the law, the landlord must pay income tax (10%), this point should be settled and fixed in the contract.


Luxury property sale tax. Amounts 20% if property valued more than 30 bln Rp ($2.14 mln). Below this no tax applied (amendment from June 10,2019 (PMK №86/2019)

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