Renting out property in Indonesia: landlord guide

Costs of buying

• The buyer pays land and building acquisition duty (BPHTB) of 5% of the value above a small regional allowance, plus notary (PPAT) fees.
• The seller pays a final income tax of 2.5% of the price. New properties from developers also carry VAT.
• Land and building tax (PBB) is charged every year, at up to 0.5% of the taxable value.

Buying as a foreigner

• Foreigners cannot hold freehold (Hak Milik). Foreigners with a residence permit can hold a house on a right of use (Hak Pakai) or an apartment unit under a strata title, for up to 30 years, extendable by 20 and renewable by 30.
• Each region sets a minimum price for homes bought by foreigners, commonly several billion rupiah in Jakarta and Bali.
• Long leaseholds of 25–30 years are a common alternative, especially for villas in Bali. Arrangements using an Indonesian nominee owner are not legally protected.

Official guidance: Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN) · Directorate General of Taxes

How rental income is taxed

• Rent from land and buildings carries a final income tax of 10% of the gross rent.
• If the tenant is a company or a registered tax withholder, the tenant withholds the 10% and pays it by the 10th of the following month; otherwise the owner pays it.
• How this applies to non-resident owners can depend on tax treaties; check with a tax adviser.

Expenses claimable against rental income

• Because the 10% is a final tax on the gross rent, expenses are not claimable against rental income in Indonesia.
• Track maintenance, management, PBB and insurance anyway: they set your real net yield, and your home country may let you claim them.

Tenancy customs

• Rent is often paid a year or more in advance, especially for houses and villas.
• Write the lease in Indonesian (with an English version if needed); contracts in Indonesian are required for agreements involving Indonesian parties.
• Short-term holiday letting needs a business licence in many areas, including Bali.

Key dates

• Usually by 31 August (varies by region): Land and building tax (PBB)
• 10th of the following month: Pay the 10% final tax on rent you received (if the tenant didn't withhold it)
• 31 March: Annual individual tax return (SPT) for tax residents

Questions landlords ask

What is a good rental yield in Indonesia?

Gross yields on Jakarta apartments are commonly around 5–7%, and Bali villas vary widely with tourism. The 10% final tax is on gross rent, so check the net figure in the rental yield calculator for Indonesia.

Can foreigners buy property in Indonesia?

Not freehold. Foreigners with a residence permit can hold a house under Hak Pakai or an apartment under a strata title, above regional minimum prices. Long leaseholds are a common alternative.

How is rental income taxed in Indonesia?

A final 10% of the gross rent, withheld by business tenants or paid by the owner. No expenses are claimable against it.

Is a nominee arrangement safe for foreigners in Indonesia?

No. Holding property through an Indonesian nominee is not legally protected; use Hak Pakai, a strata title or a registered long lease instead.

Official sources

• Directorate General of Taxes
• Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN)
• Directorate General of Immigration