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Investment Types in Indonesia

As an investor captivated by the allure of Indonesia, you may be considering expanding your property portfolio in this enchanting archipelago. It's essential to familiarise yourself with the nuances of freehold and leasehold property laws in the country.

What is Equity Release

Equity release — accessing home equity for investment

The concept behind equity release is to provide homeowners with a way to access the equity they have earned in their homes, as their home's value has increased due to capital appreciation. This can be particularly useful for those who might need extra money to cover expenses, fund home improvements, or help family members, for example.

Equity release — accessing home equity for investment

Our GPFG clients are using their equity to fund cash-flow positive property investments, which generate positive return and passive income. This is an appealing option for those looking to expand or diversify their investment portfolio, as well as seeking additional income streams.

Requirements

Investing in a Leasehold

Anyone can lease a property in Bali under the Hak Pakai (right of use).

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

  • Only available for Indonesian Nationals or if you have a PT PMA with a 10 billion IDR capital guidance.
  • Minimum land size 20 ares and 5 billion IDR for a villa (Bali).
  • Minimum 2 billion IDR for an apartment on a commercial land (Bali).

Duration

Investing in a Leasehold

  • Available for everyone, leasehold contract under your own name.
  • Any duration available up to 80 years (usually 25 years).

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

80 years.

Extension

Investing in a Leasehold

Extension rights are yours per contract, price and conditions usually negotiated during the lease, or at the end of the first lease.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

A new HGB certificate can be acquired.

Set Up

Investing in a Leasehold

  • All you need is a passport copy and a POA if you want to sign from overseas.
  • The lease will be notarised and registered with the Land registry.
  • Due diligence takes 2 weeks.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

  • Company set up approx 2,000 USD.
  • 100% foreign ownership with 2 directors.

Tax

Investing in a Leasehold

  • Lease Tax 10% for the seller to be paid at lease signature.
  • Notary fee 1-1.5%.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

Buyer's tax 5%, seller tax 2.5%.

Payment

Investing in a Leasehold

  • Deposit payment to book the unit.
  • Land lease agreement.
  • Building agreement when buying off the plan.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

  • Deposit payment.
  • Land transfer agreement.
  • Building agreement.

VISAS

Investing in a Leasehold

Not provided.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

Available INVESTOR + EMPLOYEES.

Taxes thereafter

Investing in a Leasehold

Taxes on rental income are 20% for a foreigner, 10% for a resident/working in Indonesia, all is declarative through your management company.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

  • Corporation tax 0.5% up to 4 billion IDR turnover.
  • Company tax return and personal tax returns.
  • Tax efficient.

Resales

Investing in a Leasehold

Sale of the lease, at any point, 10% tax on the value agreed by both parties.

Buying Freehold (Hak Milik for Indonesians ONLY) or HGB (Right of Use)

  • Sale of the company.
  • Land transfer tax 2.5% for the seller.

Hak Guna Bangunan
VS
Hak Pakai

Purpose

Hak Guna Bangunan

The right to build.

Hak Pakai

The right to use property.

Certificate Validity

Hak Guna Bangunan

Initial valid 30 years + 20 extension + 30 renewal thus the total ownership is 80 years.

Hak Pakai

Initial valid 25 years + 25 extension thus the total ownership is 50 years.

FAQs