Buying Property in Bali: Taxes, Costs, ROI, Maintenance and Residence Permit

Bali has long attracted investors and expats due to its warm climate, low cost of living and growing real estate market. However, purchasing real estate on the island is associated with certain legal and financial nuances.

We talk about the main expenses, taxes, potential profitability (ROI), the cost of housing maintenance and the possibility of obtaining a residence permit (RP).

According to Indonesian law, a foreign resident cannot purchase real estate. A foreigner can own real estate under a long-term lease agreement called a Leasehold Agreement.

This is a notarized contract that has legal force and is concluded with a notary. During the lease period, you are the full owner and can resell it.

Owning a property under this contract is absolutely safe. The leasehold term is 31 years with the possibility of extending it for 25 years.

At the end of the lease term, which is 56 years in total, a new period is reviewed and so on without limitation.

All negotiations on extending the lease terms are conducted by the management company.

• 11% VAT
• 1% Notary fee

VAT and notary fees are paid by the buyer, and income tax is paid by the developer.

When purchasing real estate in installments, VAT is proportionally included in the payments under the real estate purchase agreement.

The notary fee is paid when concluding the main lease agreement with a notary. After payment, you become the full owner with an entry in the official land register.

Ownership of land and building is subject to PBB (Pajak Bumi dan Bungunan) tax.
The tax is calculated based on the basic rates (NJOP) of the value per square meter of land and property approved by local government agencies. These rates vary by region. The total value of the land and building based on the basic rates is multiplied by 0.2%. This is the annual tax amount.

For example, the annual tax for a 150 sq.m. villa and a 400 sq.m. plot is $300.

• 10% tax on rental income and property sales.

After purchasing a property in Bali, it is important to consider the costs of its maintenance, including:

• Utilities - electricity, water and internet (about $100-200 per month, depending on consumption).

• Villa maintenance – staff services (maid, gardener, security) can cost $300-$1000 per month.
• Repairs and depreciation – it is recommended to set aside 5-10% of annual income for unexpected expenses.
• Insurance – a property policy costs an average of $500-$1000 per year

The rental market in Bali remains highly profitable. The average ROI is 10-20% per year with proper property management. Profitability depends on several factors:

• Location – popular areas (Canggu, Seminyak, Ubud) have high occupancy.
• Property type – villas with a pool are most popular among tourists.
• Seasonality – peak rentals are during the dry season (May–September).

Buying real estate does not automatically entitle you to a residence permit in Indonesia, but there are several options:

• KITAS Investor Visa – for investments of $70,000 or more through PT PMA.
• Retirement Visa – available to individuals over 55 with proven income.
• Social Visa – a short-term option for a long stay (up to 180 days).

Buying property in Bali can be a profitable investment if you consider the legal aspects, taxes and ongoing costs. A high ROI makes the market attractive, but to successfully own a property, it is important to manage the property wisely and consider possible legal risks.