The formal laws for foreigners regarding investing in property in Indonesia are a little knotty as compared to the locals, however, they are still allowed to buy condominiums. Foreigners can also buy control of the landed property but this include a great legal difficulty in most of the cases.
The essence of the foreign ownership of strata-title residential property is the Government Regulation No. 41 of June 1996 respectively. Foreigners can also sign a convertible lease agreement through which the title is held in the name of the developer, while the lease is held for a definite period.
Foreigners in Indonesia are not allowed to own a freehold lane, however, they can acquire the rights to the use of land, not the ownership of rights.
Three options are open for them to buy land in Indonesia:
- By the way of an Indonesian representative:
It has become a very common practice to have an Indonesian representative acquire the land for a foreign buyer. The ownership shall be transferred from the previous owner to the Indonesian representative to further serve the purpose.
- By the way of a PMA Company:
PMA involves a status of doing business in the country. A PMA company has 30 years to operate after information. It could be granted another 30 years and more if it expands the project by the way of additional investments. The good news is that a foreigner can have 100 percent control over the same.
- Through a leasehold title:
This could be granted to all the qualified foreigners who are domiciled in Indonesia with a KITAS working visa. The lease runs for a period of 25 years and can be renewed for another 25 years.
The locals can hire a real estate agent and a lawyer to buy a property and complete all the formalities of registry, etc.
- Transfer tax is charged at the rate of 5 percent of the total property value.
- The cost of sale and purchase of land deed is 1 percent of the total property value.
- Legal fee is negotiable and is generally charged at the rate of 0.5-1.5 percent of the total property value.
- Registration fee is charged at the rate of 0.20 percent of the total property value.
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