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.

Leasehold VS Freehold / HGB

In Indonesia, when it comes to buying property, two prominent types of ownership exist: leasehold and freehold.

Leasehold grants an individual the right to use and occupy a property for a specified duration, usually ranging from 25 to 30 years, with the possibility of renewal. This method is particularly popular among foreigners as it's the most straightforward way for them to access property in the archipelago.

On the other hand, freehold offers complete, indefinite ownership rights to the land and any structures built on it. This means there's no expiration on the ownership, and it can even be passed down through generations. However, it's crucial to note that only Indonesian citizens can obtain freehold titles, making it off-limits for foreign buyers.

On this table below you will find the important comparison between Leasehold and Freehold (For Indonesians) or HGB (For International Investor)

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 or minimum land size 20 ares and 5 billion IDR for a villa(Bali) or 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 w 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

Requirements

Investing in a Leasehold

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