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Frequently Asked Questions: Foreign Ownership of Property in Indonesia


Indonesia's breathtaking landscapes, and growing economy have made it an attractive destination for foreigners looking to invest in property. However, navigating the regulations surrounding foreign ownership can be complex. To help clarify the process, we've compiled a list of frequently asked questions regarding how foreigners can own property in Indonesia.

 

1. Can foreigners own property in Indonesia?

Yes, foreigners can own property in Indonesia, but there are restrictions and regulations they must adhere to.

 

2. What types of property can foreigners own?

Foreigners can typically own apartments and condominiums in Indonesia, as these are classified as "strata title" properties. However, there are limitations on owning land and certain types of properties, such as landed houses or villas.

 

3. How can foreigners own land in Indonesia?

Foreigners are generally prohibited from owning land outright in Indonesia. However, they can acquire land through leasehold arrangements, where the land is leased from the government or a private owner for a specified period.

 

4. What is the maximum leasehold period for foreigners?

The maximum leasehold period for foreigners in Indonesia is typically 25 to 30 years, with the option to extend for an additional period.

 

5. Are there any exceptions to foreign ownership restrictions?

Yes, there are certain exceptions and special provisions for foreign ownership in designated special economic zones (SEZs) and through specific investment schemes.

 

6. Can foreigners own property through a nominee arrangement?

While it's not uncommon for foreigners to use nominee arrangements, where a local partner or entity holds the property on behalf of the foreigner, this practice is legally murky and carries risks. It's advisable to avoid such arrangements and ensure compliance with applicable regulations.

 

7. What are the steps involved in acquiring property as a foreigner?

The process of acquiring property as a foreigner typically involves conducting thorough research, engaging the services of a reputable real estate agent and legal advisor, negotiating the terms of the leasehold agreement, and ensuring compliance with all relevant regulations.

 

8. What taxes and fees are associated with property ownership in Indonesia?

Foreigners may be subject to various taxes and fees when acquiring and owning property in Indonesia, including value-added tax (VAT), income tax, and property transfer taxes. It's essential to consult with a tax advisor to understand the specific obligations.

 

9. Can foreigners rent out their property in Indonesia?

Yes, foreigners can rent out their property in Indonesia either on a short-term or long-term basis. However, they must ensure compliance with rental regulations and tax obligations.

 

10. What are the risks associated with foreign ownership of property in Indonesia?

Risks associated with foreign ownership of property in Indonesia include legal complexities, changes in government regulations, currency fluctuations, and disputes over property rights. It's crucial for foreigners to conduct thorough due diligence and seek professional advice to mitigate these risks.

 

11. Can foreigners own property in Indonesia if they are married to an Indonesian citizen (WNI)?

Yes, foreigners married to Indonesian citizens (WNI) can own property in Indonesia under certain conditions.

 

12. What are the requirements for foreigners married to WNI to own property?

Foreigners married to Indonesian citizens must obtain approval from the Indonesian spouse and the Ministry of Agrarian and Spatial Planning (ATR/BPN) to acquire property. They may need to sign a prenuptial agreementto clarify ownership rights.

 

13. Can foreigners married to WNI own land or only strata title properties?

While the regulations regarding property ownership for foreigners married to WNI are less stringent compared to individual foreign ownership, they are still generally restricted from owning land outright. However, they can typically acquire strata title properties such as apartments or condominiums.

 

14. Are there any limitations on the type or location of property that foreigners married to WNI can own?

Foreigners married to WNI may face restrictions on the type or location of property they can own, depending on local regulations and the specific circumstances of the marriage. They should consult with legal advisors to understand any limitations that may apply.

 

15. What documentation is required for foreigners married to WNI to acquire property?

Documentation requirements may vary depending on the region and the type of property being acquired. Generally, foreigners married to WNI will need to provide proof of marriage, identification documents, and any additional paperwork required by the Ministry of Agrarian and Spatial Planning (ATR/BPN).

 

16. What type of rights can foreigners have to property in Indonesia?

Foreigners in Indonesia can typically acquire property rights through leasehold arrangements, commonly known as "Hak Pakai" or "Right to Use." This allows them to possess and utilize the property for a specified period, typically up to 25 or 30 years, with the option to extend.

 

17. Are there any other property rights available to foreigners?

In addition to leasehold rights, foreigners may also have the option to acquire "Hak Guna Bangunan" (Right to Build) titles, which grant them the right to construct and own buildings or structures on land owned by a third party, typically for a period of up to 30 years with extensions.

 

18. What is the difference between leasehold rights and Right to Build titles?

Leasehold rights (Hak Pakai) typically apply to properties such as apartments, condominiums, or residential units within a complex, allowing foreigners to use the property for residential purposes. Right to Build titles (Hak Guna Bangunan) apply to the construction and ownership of buildings or structures on land owned by another party, providing more flexibility for commercial or development purposes.

 

19. Can foreigners inherit property rights in Indonesia?

Foreigners may inherit property rights in Indonesia under certain conditions, such as through marriage to an Indonesian citizen or through a valid will. However, inheritance laws and regulations can be complex, and it's essential to consult with legal advisors to understand the specific rights and obligations involved.

 

20. Can foreigners sell or transfer property rights in Indonesia?

Foreigners can typically sell or transfer their property rights in Indonesia, subject to compliance with relevant regulations and approval from the appropriate authorities. The process may involve obtaining clearance from the Ministry of Agrarian and Spatial Planning (ATR/BPN) and other government agencies.

 

21. What protections do foreigners have for their property rights in Indonesia?

Foreigners in Indonesia are entitled to legal protections for their property rights, including the right to possess, use, and dispose of property in accordance with the terms of their leasehold or ownership agreements. However, it's essential to ensure compliance with all applicable laws and regulations to safeguard property interests.

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