source: own property abroad

Foreigners can't directly own land in Bali like they would in their home country, but there are still a couple ways to acquire a villa:

Leasehold (Hak Sewa): This is the most popular option. You essentially rent the land and villa for a long term, typically 25-30 years, with the option to renew the lease upon expiry. It's a simpler process but offers less security compared to freehold ownership.

Right of Use (Hak Pakai): This grants you a stronger right to use the property and the land underneath it. You can qualify for this with a residence permit and it allows ownership for a set period. There can be limitations on property size and price with this option.

Company Ownership (PT PMA): By setting up a limited liability company in Indonesia, you can acquire freehold ownership (Hak Guna Bangunan) of the villa and land. This is a more complex process but offers the most control and security.

Purchase Agreement (Akta Jual Beli - AJB): This is a crucial contract signed by both you and the seller. It outlines the specifics of the sale, including:

•  Purchase price and payment terms

• Description of the property (including land area and villa details)

•  Warranties and guarantees from the seller

• Transfer of ownership rights

This document is drafted and witnessed by a notary public (notaris) in Indonesia to ensure its legality.

Land Certificate (Sertifikat Hak Milik - SHM): This is the official document proving ownership of the land the villa sits on. It's issued by the National Land Agency (Badan Pertanahan Nasional - BPN). Important Note: As a foreigner, you can't directly own land in Bali under SHM. You'll need to verify the type of land ownership the villa uses (Leasehold - Hak Sewa, Right of Use - Hak Pakai, or company ownership through PT PMA) and ensure the seller has the legal right to transfer those rights.

Notary and Legal Fees: Expect to incur fees for the notary who drafts and witnesses the Purchase Agreement, as well as potential legal fees from a lawyer who can guide you through the process, conduct due diligence on the property, and ensure your interests are protected.

Here's what you can add to your understanding:

Power of Attorney (POA): If you're not present in Bali throughout the buying process, you can appoint a trusted representative with a POA to handle tasks like signing documents on your behalf. This needs to be legalized in your home country with an Apostille stamp.

Due Diligence: Before finalizing the purchase, a thorough investigation of the property and seller is essential. This involves verifying land titles, checking for any outstanding debts or encumbrances, and ensuring the villa is built with proper permits. Your lawyer can help with this process.

By ensuring all these documents are in order and working with reputable professionals (notaries, lawyers, real estate agents), you significantly reduce the risk of encountering legal issues or fraudulent activity during your villa purchase in Bali.

Transfer Tax (Bea Perolehan Hak atas Tanah dan Bangunan - BPHTB): This is a one-time tax paid by the buyer upon transferring ownership of the property. The tax rate typically falls between 5% and 20%, depending on the property type and its value.

• Standard Rate (5%): Applies to most property transactions.

• Luxury Tax (20%): May be imposed on high-value properties exceeding a certain threshold.

Land and Building Tax (Pajak Bumi dan Bangunan - PBB): This is an annual tax levied on all property owners in Bali, regardless of nationality. The tax amount is calculated based on the property's assessed value (Nilai Jual Objek Pajak - NJOP), which is a government-determined market value. The tax rate for PBB is generally quite low, typically around 0.5% of the NJOP.

Notary Fees: As you mentioned, notary public services come with associated fees. These fees cover the notary's work in drafting and witnessing legal documents like the Purchase Agreement. The fees are usually calculated as a percentage of the property's value and can range from 0.5% to 1%.

Here are some additional property-related taxes and fees to be aware of:

• Seller's Income Tax (PPH): In some cases, the seller may be liable to pay a capital gains tax on the sale of the property.

• Construction Tax: If you're buying a newly built property, there may be a construction tax applicable.

• Name Change Tax (Bea Balik Nama): A small fee is charged for changing the name on the property certificate.

By factoring in these taxes and fees when budgeting for your villa purchase, you can avoid any unexpected financial surprises down the line. It's always wise to consult with a tax advisor familiar with Indonesian property regulations to get a more accurate estimate of the total costs involved.