Legal & tax insights
Foreign buyers cannot hold Hak Milik (freehold) in Indonesia. In practice the workable routes are Hak Pakai (right of use, up to 30 years extendable), leasehold agreements of 25–30 years with extension clauses, or HGB (right to build, up to 30 + 20 years) held through a PT PMA company. Which one fits depends on whether the plot is for private use, rental or a commercial development.
Budget for transaction costs of roughly 8–12% of the purchase price: BPHTB transfer tax 5%, seller income tax (PPh) 2.5% where applicable, notary and PPAT fees typically 0.5–1.5%, plus surveyor, translator and certificate-conversion costs. Annual land and building tax (PBB) is modest but must be paid up to date before transfer.
The legal checks that decide whether a transaction is safe:
- Certificate type (SHM, SHGB, Girik) and whether it can be converted
- Seller authority and, where inherited, consent of all heirs
- Customary (adat) claims alongside the formal title
- Boundaries measured and recorded by a licensed surveyor
- PBB land tax paid up to date
- Notary/PPAT with experience in foreign-linked transactions
- Zoning confirmation before any permit application
