Buying in Indonesia: A Guide for Foreign Buyers

Published on May 3, 2026 and written by Cyril Jarnias

Acquiring Real Estate in Indonesia

Acquiring real estate in Indonesia can prove to be a complex undertaking for foreigners, due to strict regulations and local peculiarities. This article aims to demystify the purchasing process, providing key information and practical advice for navigating a growing market, where investment opportunities are plentiful but a thorough understanding of the applicable laws and restrictions is essential.

From identifying permitted zones to optimizing legal structures, we break down the essential steps to successfully and securely complete your acquisition.

Understanding Real Estate Regulations and Obligations in Indonesia

Foreigners can purchase real estate in Indonesia primarily under two legal forms: Hak Pakai (Right to Use) in a personal capacity or, through a PT PMA company, via a Right to Build (Hak Guna Bangunan – HGB). Full land ownership (Hak Milik) remains strictly reserved for Indonesian citizens.

Type of Right	Accessible to Foreigners	Main Conditions	Duration and Renewal
Hak Pakai (Right to Use)	Yes	Primary residence, KITAS/KITAP required. Residential use only.	25-30 years initial, renewable up to 70 years
Hak Sewa (Long-term Lease)	Yes	Contractual lease from Indonesian owner	Up to 80 years depending on contract
Hak Guna Bangunan (HGB)	Via PT PMA	Requires establishing a foreign-owned company in Indonesia	30 years initially, renewable
Hak Milik	No	Exclusively reserved for Indonesian citizens	Unlimited

Restrictions and Conditions

• Using a nominee agreement is illegal and strongly discouraged.
• Land acquired under “Hak Pakai” must generally have a minimum value set by region; for example, in Bali this threshold can be around 5 billion IDR.
• The property must serve as the primary residence.
• Rights must be registered with the National Land Agency (BPN).

Required Licenses and Permits

1. Possess a valid residence permit: KITAS or KITAP to obtain a “Hak Pakai” certificate.
2. Register the transaction with the BPN so the certificate is issued in the foreign buyer’s name.
3. For a purchase via a PT PMA: full registration with local authorities.

Simplified Procedure for Obtaining Hak Pakai

1. Land title due diligence with a notary/lawyer.
2. Signing before a certified notary; preparation and submission of required documents.
3. Payment of applicable taxes upon transfer.
4. Registration with the BPN for officialization.

Applicable Taxation

Real Estate Sales Tax

• The buyer generally pays a tax called BPHTB (~5% on the declared value).
• The seller pays a tax on real estate gains (~2.5%).

Annual Taxes

• Annual property tax proportional to the cadastral value.

Other Possible Fees

• Notary fees/various administrative fees at each stage.

Role of Professionals

Notaries

• Legal verification of the land title
• Official drafting/validation of deeds
• Mandatory transmission to the national agency

Specialized Lawyers

• In-depth legal due diligence
• Advice on the appropriate structure for the project

Reporting Obligations

Any sale/acquisition must be registered with the BPN so that the titles are legally enforceable against third parties.
Omission exposes both buyer and seller to major risks regarding the future validity of the transfer.

Practical Checklist to Avoid Common Pitfalls:

1. Always verify authenticity and legal history with an independent local professional;
2. Refuse any scheme involving a nominee;
3. Insist that all payments go through documented bank channels;
4. Systematically negotiate all taxes/fees upfront in the preliminary agreement;
5. Ensure your residence permit remains valid for the entire period covered by the acquired right.

Key takeaway: only strict adherence to the legal framework can secure your real estate investment in Indonesia as a foreigner!

Concrete Example:

A French investor holding a KITAP wishes to legally reside in his Balinese villa acquired under “Hak Pakai”; he hires a local lawyer who verifies no disputes encumber the property, then finalizes the deal before a notary prior to official transmission to the BPN – thus guaranteeing him full legal security for the entire duration permitted by his current immigration status.

International Taxation: What Foreigners Need to Know

Foreigners who acquire real estate in Indonesia are subject to several specific taxes, with varying obligations and tax regimes depending on the type of property and acquisition structure.

Property Taxes Applicable to Foreign Buyers

Type of Tax	Rate (2025)	Basis of Calculation	Main Observations
Annual Property Tax (PBB)	0.1% to 0.5%	Estimated value of land + buildings	Payable annually by the owner
Acquisition Tax (BPHTB)	5%	Transaction value or estimated value	Payable once at purchase

• Annual Property Tax PBB: Mandatory for all owners, including foreigners through legal structures. The rate is generally set locally between 0.1% and 0.3%, but can go up to 0.5% since the 2022 tax reform.
• Acquisition Tax BPHTB: Imposed upon purchase of the property; the rate is uniformly set at 5%.

Specific Tax on Rental Income

• Non-residents are subject to a flat withholding tax of 20% on all gross rental income generated in Indonesia.

International Tax Treaties

Indonesia has signed several bilateral tax treaties to avoid double taxation with various partner countries. These treaties generally allow for the crediting or exemption of certain taxes paid in Indonesia in your country of tax residence. It is essential:

• To check if a treaty exists between Indonesia and your country.
• To analyze how it applies to real estate income or capital gains from Indonesian assets.

Reporting Obligations and Using Tax Advisors

List of main obligations:

• Declare income earned in Indonesia to local tax authorities each year.
• For non-residents receiving rental income: comply with the reporting obligation even if tax is withheld at source.
• Keep all proof of tax payments made (PBB, BPHTB).

Systematically using a tax advisor specialized in international taxation allows you to:

• Secure your declarations,
• Optimize your overall tax burden,
• Avoid any unintentional double taxation.

Differences Based on Property Type

Category	Main Taxation
Residential	Standard taxation on PBB & BPHTB; rare exemptions
Commercial	Similar taxation but often higher tax base

Some social housing may occasionally benefit from a reduced rate upon transfer.

Essential Documents for Buying Real Estate in Indonesia

To acquire real estate in Indonesia as a foreigner, it is essential to understand local property titles and the documentation required by Indonesian law.

Types of Land Titles and Their Relevance

Title	Possible Holder	Permitted Use	Duration and Renewal	Main Restrictions
Hak Pakai	Foreigner	Residential or Commercial	30 years, renewable up to 80 years	Usage only, not full ownership
Hak Guna Bangunan	Indonesian Company	Construction (Residential/Comm.)	30 years + 20 + 30 years (renewable)	Must go through a locally owned or controlled company
Hak Milik	Indonesian Citizen	Full Ownership	Unlimited	Prohibited for foreigners

• Hak Pakai: This is the main title accessible to foreigners. It grants a right to use the land for residential or commercial purposes for an initial period of 30 years, renewable up to a maximum total of 80 years. This title does not confer full ownership but remains the primary legal avenue for direct purchase in one’s own name.
• Hak Guna Bangunan: Available only through a local company (PT PMA), it allows for the construction and operation of a building on the land.
• Hak Milik: Full ownership of the land is only accessible to Indonesian citizens; any arrangement aimed at circumventing this rule (nominee) is illegal.

Required Administrative Documents

List of documents generally required for a real estate purchase by a foreigner:

• Valid Passport
• Temporary (KITAS) or Permanent (KITAP) Residence Permit
• Local Tax Certificate
• Proof of Address in Indonesia
• Prior Written Agreement if using local bank financing
• Notarized Sale and Purchase Agreement

In case of using bank financing:

• Formal loan agreement with detailed financial terms

Notarial Procedures and Mandatory Certificates

1. Verification with the notary (“Pejabat Pembuat Akta Tanah” – PPAT):
   – Complete analysis of land titles
   – Confirmation that the seller legally holds the right being transferred
2. Obtaining the Certificate of Authenticity (“Sertifikat Tanah”) issued by the national land agency:
   – Guarantees the property has not been subject to undisclosed mortgages or legal disputes
3. Official registration with local authorities after signing before a notary

Please note that it is highly recommended to consult a specialized lawyer or a local advisor to ensure all procedures strictly comply with current Indonesian regulations, particularly to avoid any future nullity related to documentary or contractual inadequacy.

Summary in list form:

• Valid Passport
• KITAS/KITAP depending on residency status
• Tax Certificate/Local NPWP if applicable
• Proof of payment of taxes/fees related to the real estate transaction
• Contract signed before a certified PPAT notary public
• Authentic land certificate officially issued

The use of nominee agreements to indirectly obtain a prohibited title remains illegal in Indonesia — any attempt exposes one to outright nullity as well as criminal penalties.

Regulatory compliance must always be verified before any final financial commitment.

Can You Really Acquire Real Estate Property in Indonesia?

Foreigners wishing to acquire real estate property in Indonesia are subject to strict restrictions. Full land ownership (Hak Milik) is exclusively reserved for Indonesian citizens. However, several legal mechanisms allow indirect or temporary access to real estate for non-Indonesians.

Types of Properties Accessible to Foreigners

Title / Contract	Duration	Renewal	Direct Holding or via Company
Hak Pakai (Right to Use)	25-30 years	Up to 70 years total	Individually with residence permit
Hak Sewa (Long-term Lease)	Up to 80 years	Often negotiable	Directly by a foreigner
Hak Guna Bangunan (HGB – Right to Build)	30 years	Twice 20 years	Via foreign-owned PT PMA company

• Hak Pakai: Allows a foreigner with a long-term residence permit (e.g., KITAS/KITAP, investment visa) to occupy and use a property for an initial period of 25-30 years, renewable up to twice to reach up to 70 years. This title is personal and registered with the cadastre.
• Hak Sewa: A private contract granting the right to use a property for a period that can extend up to 80 years. It does not confer ownership but offers flexibility and contractual security.
• Hak Guna Bangunan (HGB): Generally granted to foreign companies established as a PT PMA; allows for the construction and ownership of buildings on leased land.

Restrictions and Applicable Laws

• A foreigner cannot directly hold the “Hak Milik” title on land or housing.
• Obtaining “Hak Pakai” necessarily requires holding a valid residence permit in Indonesia such as KITAS/KITAP or sometimes an investor visa.
• To access HGB, it is necessary to establish a local company with foreign capital (PT PMA).

Recent Developments

Recent legislative adjustments aim to clarify the rights related to “Hak Pakai” and encourage certain foreign investments in high-end residential real estate. However, no major reform has yet opened access to “Hak Milik” for non-citizens.

Important Update
In recent years, some tourist regions like Bali have eased their administrative procedures around “Hak Pakai”, notably facilitating its acquisition for retirees holding a KITAP.

Common Practices & Key Steps

1. Project Definition:
   • Choice between direct purchase under “Hak Pakai”, long-term lease (“Hak Sewa”), or establishing a PT PMA structure.
2. Land Status Verification:
   • Legal audit with the Indonesian BPN to ensure the property is eligible for the chosen type.
3. Obtaining/Validating Required Permits:
   • Application/presentation of an investor visa or long-stay permit if necessary.
4. Signing before a Local Notary:
   • Drafting of officially translated contracts; payment of related taxes upon transfer/issuance of real/conventional rights.
5. Official Registration:
   • Mandatory registration with local land authorities so the right is enforceable against third parties.

• Foreigners can legally hold:
  • Individual Right to Use (“Hak Pakai”) with conditions
  • A long-term lease (“Hak Sewa”)
  • Commercial rights via a foreign company (“HGB”)
• Full ownership remains prohibited
• Frequent need to obtain/specific permit depending on chosen type

Important: In case of inheritance, if the heir is also a foreigner, they must transfer their rights within one year of the transfer unless married to an Indonesian citizen.

Practical Example:
A French expatriate living in Bali buys a villa under “Hak Pakai” after obtaining his KITAP; he legally occupies this property throughout his retirement and renews his title twice without major difficulty thanks to recent developments facilitating these administrative procedures.

Buying real estate in Indonesia as a foreigner therefore requires legal prudence and administrative foresight to ensure long-term asset security.