Indonesia

FAQ about buying property in Indonesia

FAQ about buying property in Indonesia

Property price:

The cost of a one-bedroom villa on the primary market in a premium complex with land and access to the sea starts from 350 thousand euros.

The average price per square meter of a fully furnished villa with premium finishes is 3800 euros.

When buying a villa from a developer at the construction stage, a convenient installment plan is possible. The payment plan is negotiated individually with the developer.

As a rule, the down payment is 30%, the rest of the amount is paid in stages as construction progresses over 1-1.5 years.

Yield

Given the tourist congestion of the island of Bali, the projected profitability from renting a villa will be from 10 to 12% annually. We are talking about net profitability, from which taxes on rental income and the commission of the management company have already been deducted.

Daily rent of a villa in Bali

  • 1 bedroom: $263
  • 2 bedrooms: $368
  • 3 bedrooms: $578

Taxes when buying property

  • 11% VAT (Value Added Tax)
  • 1% Notary fee

VAT and notary fees are paid by the buyer and Income Tax is paid by the developer.

The VAT tax is proportionally included in the payments under the contract for the acquisition of real estate.

The notary fee is paid at the conclusion of the main Leasehold agreement to the notary. After payment, you become a full owner with an entry in the official land register.

Ownership of land and building is subject to PBB tax (Pajak Bumi dan Bungunan).

The tax is calculated based on the basic rates (NJOP) of the value of a meter of land and building, approved by local government agencies. These rates differ for different regions.

The total cost of land and building based on base rates is multiplied by 0.2%. This is the amount of the annual tax.

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

10% Tax on income from rental and sale of real estate.

When purchasing a villa through the Mercury Group, ownership taxes are included in the management fee and are paid by the management company.

If you plan to rent out the property through a management company, the company's commission will be 30% of the rental income.

Turning to Mercury Group, the maintenance of your property will be our concern. We will fully manage your property (from renting to cleaning) and pay taxes, you will receive passive income.

Thus, monthly payments and expenses are 40%. What is already taken into account in your annual profitability from the rental business, which will be 10-12% per annum.

Write to us at info@mercutyestate.com and we will send you detailed calculations on the yield from renting a property in Bali.

How will you earn your income?

To generate income, you do not need to open a company or obtain a license. 

You will receive your dividends anywhere in the world on a quarterly basis, along with accounting data.

Can foreigners own property in Bali when they buy house?

According to Indonesian law, a foreign resident cannot purchase real estate property. A foreigner can own real estate under a long-term leasehold agreement. This is a notarial contract, which has legal force and is concluded by a notary.

For the duration of the lease, you are the full owner and can resell it. Ownership of real estate under this contract is absolutely safe.

 

The term of the leasehold is 31 years, renewable for 25 years.

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

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

Payment options

  • Cash payment upon arrival
  • Payment via bank transfer
  • Payment with cryptocurrencies

Cryptocurrency is not a means of payment for goods and services.

Defined as a security that can be traded on local cryptocurrency exchanges.

In most cases, USDT is used for payment.

Purchase agreement

If the project is under construction, then an MOU contract is concluded at the beginning.

If the construction is completed, then a notary contract Leasehold is concluded.

The Leasehold Agreement is based on Leasehold Agreements from the British system of law.

MOU is a memorandum of understanding, it is an analogue of the Russian agreement of intent.

It contains all the data, obligations: who is obliged to do what, who is obliged to pay, who is obliged to complete the construction. The MOU is the basis for signing the Leasehold agreement. After the construction is completed, notarial data is added to the MOU and the contract is signed by a notary. 

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