The regulations for foreigner to have a real estate in Indonesia

Foreigners are not allowed to own land in Indonesia, but they can own a building on the land through a right of use, also known as Hak Pakai or Hak Guna Bangunan, which is a leasehold title that grants the right to use and build on a piece of land for a certain period of time (usually 25 or 30 years, depending on the type of land and subject to renewal).

Here are some regulations for foreigners to own a real estate in Indonesia:

  1. Right to Use (Hak Pakai) : The Hak Pakai is a leasehold title that grants the right to use and build on a piece of land for a maximum of 25 years, with the possibility of one 25-year extension.

  2. Building Ownership (Hak Guna Bangunan) : This type of title grants the right to own and use a building on the land, but not the land itself. The Hak Guna Bangunan can be obtained by a foreign individual or legal entity, and the title is valid for 30 years, with the possibility of one 30-year extension.

  3. Property Tax : Foreigners are required to pay annual property taxes on any real estate they own in Indonesia, which typically ranges from 0.5% to 2% of the property’s value.

  4. Limited Liability Company (PT PMA) : Foreigners can also purchase real estate in Indonesia by setting up a Limited Liability Company (PT PMA), which is a legal entity that is majority-owned by foreign shareholders.

  5. Indonesian nominee: Some foreigners will use an Indonesian nominee, which is an Indonesian citizen who acts as the legal owner of the property on paper, while the foreign investor holds the economic rights to the property. This practice is illegal and is not recommended as it may lead to legal disputes.