investing
Key Insights and things to consider before investing in a property
Considering a real estate investment in Bali or Indonesia? Here’s your comprehensive guide to making informed decisions and minimizing risks.
Real Estate
Defining Your Investment Goals in Bali and Indonesia
Before diving into the Bali or Indonesia real estate market, it’s crucial to outline your investment goals. Whether it’s for personal use or business, a well-defined plan will guide your choices.
What budget do I need?
-Property price and land taxation
-Tax on the transaction and VAT
-Notary fee
Budgeting is a critical step in your Bali and Indonesia real estate investment journey. From property costs to taxes and fees, a well-planned budget sets the stage for a successful investment
Where is the most ideal location?
-Mature market
-New destination
-Exclusive location
The location of your property in Bali or Indonesia can significantly impact its value and appeal. From accessibility to future developments, location is a key factor in your strategy of investment
What type of property?
-Luxury villas
-Commercial spaces
-Appartement
The Bali and Indonesia real estate market offers a plethora of options. Your choice should align with your investment goals and budget.
Freehold vs Leasehold
-Freehold
-Leasehold
-Limited freehold
Foreign investors in Bali and Indonesia need to be aware of the various ownership options available to make informed decisions.
Navigating the Property Purchase Process in Bali and Indonesia
Acquiring property in Bali or Indonesia involves a series of legal steps. From due diligence to final agreements, our buyer’s agent ensures a secure and smooth transaction.
WHAT SHOULD I KNOW?
Yes foreigners are allowed to owned a property under their name or under a corporation. The original owner loses rights on the land. There are two type of ownership for foreingers:
- Hak Pakai (right to use)
- Hak Guna Bangunan – HGB (right to build)
Both titles gives right for a certain period of time up to 80 years.
Yes foreigners are allowed to generate income with their property with the appropriate licenses.
As individual or a company, foreigners can resell or sublease their property. For long term rental licenses are easy to get.
For short term rental, individuals or companies have to apply for specific licenses under certain condition.
You and your family can get a visa fup to 10 years by investing a property.
- The second home visa by investing in a property with a value of 1 000 000 USD
- An investor Visa by buying your property under your company and investing around 600 000 USD
You do not need to set up a company to buy a villa, an apartment or lease a land.
You do need a company to buy and build on a land. If you plan to lease and build then the company is not necessary.
The lessor has to pay a tax of 10% as resident in Indonesia or 20% as non resident.
For a sales and purchase the taxation is 5% for the buyer and 2.5% for the seller.
There is a 10% local tax in Bali + 5% service charge on short term rental.
For short term and fast income buying an existing property is probably the most frequent option chosen by foreigners
For higher ROI / capital gain or having your dreamed villa, buying and building your own villa is the most relevant choice. However having a professional project manager is important.
THE 10 STEPS TO BUY A PROPERTY IN BALI
Having a professional buyer’s agent or knowing the local culture is essential to get the best price and not losing hours and being frustrated
This step will determine all the following and conditions of your purchase. The local language has the favor in case of dispute and the contract has to be in Indonesian language. It is important to make sure you do understand the terms and conditions are protecting your interest. It is the time to define the terms, the deposit and what you can do with the property.
In order to secure your deposit, we recommend to pay this deposit to a third party or a notary chosen by the buyer. The conditions to release of the deposit have to be explained in the letter of intent or the MOU.
This is probably one of the most important step. Having a due diligence will check if the owner have authority to sell the property, the tax have been paid, there is no mortgage, you have full access by the road. Lot of bad stories happened by skeepin this step or using the notary of the seller. Notaries have interest in a successful transaction and skip sometimes the orientation or business purpose of the transaction. They do check the ownership or the tax but not other add on or do a property inspection.
Buying a property in the objective to legally generate income might require to set up a company or if the buyer plans to purchase a freehold property and build on it. The process takes 3 days to 1.5 week. You can contact us to know more about the process and our service on it.
Before proceeding with the signature the buyer has to double check all the information in the contract. For a purchase of a freehold the step is less crucial as the original owner loses its rights. However if the purchase is a leasehold, the buyers is limited on its rights by the contract. The condition of the renewal has to to be clearly indicated in the contract.
Having a professional assistance during the signature is crucial. The contract has to be in the local language. We do recommend to have a trusted person to make sure what you are signing is what you agreed. We can represent you even if you are away from the country.
Once the contract has been signed, the buyer and seller have respectively to proceed with the payment and the tax.
If the act is a purchase of a freehold, the notary has to register and transfer the land title under the name of the foreigner.
It is now time to proceed with the registration of your building permit (PBG/SLF) if you are planning to build a villa. Having a building permit is essential to be able to get licenses to operate on Airbnb or doing short term rental in Bali. Contact us to know more.
After all those steps it is time to enjoy or start the business. Taxes have to be paid and following changes about regulation is crucial. Keep in touch with a professional during your investment journey.
