Private Villa in Bali: Legal and Tax
The real estate market in Indonesia has opened to foreign investors only recently. Therefore, some aspects of purchasing a private villa in Bali are rigid and some are simpler and easier than the western world.
The Indonesian law prohibits foreigners from owning land on the archipelago (only Indonesian citizens have the right to own a property title).
Therefore, to purchase a private villa in Bali you have two options:
Option 1: Sign a Leasehold agreement. This is the easy and most common option. With Leasehold agreement you lease the property (land + private villa) for an initial period of 20-30 years with additional option to extend the lease.
Option 2: Find a Freehold asset. This is the more expensive, complicated and not recommended option. As foreign individuals are not allowed to own property (such as a private villa) you can’t register the property under your individual name. You can create a local company (it's a long and costly process with ongoing tax implications) that owns the property. Alternatively, you can try to identify a local Indonesian that will sign on the contract and “own” the private villa in Bali but that is usually a recipe for disaster as they can “claim” the property for themselves at anytime as it is under their name. We DO NOT recommend to purchase Freehold property as you can achieve the same goals via Leasehold agreement in a cheaper and easier way.
Do I Need A Visa To Own A Private Villa In Bali?
The good news is that you don’t need a visa to own a private villa in Bali. If it’s an investment property you can just let it be managed by a local staff and collect the rental without stepping on the island.
If you do want to visit or live in the island you have several options. We can assist you select and then obtain the right visa the fit your specific situation:
Free 30-day Tourist Visa. If you come just to check out the villa or use it once in a while for less than a month, this is the visa for you!. You can obtain it free upon arrival at the airport in Indonesia. If you overstay, you’ll need to pay ~$70USD per day.
Visa on Arrival (VOA). If you plan to stay up to 60 days you can purchase at the airport a 30 day VOA extendable to 60 days for $38USD. Prior to your 30 day stay you will need to visit an immigration office to extend for the additional 30 days.
Social Visa. If you plan to live in Bali up to 6 months you can use this visa. It must be obtained before entering Indonesia and will allow you to enter the country for 60 days and then extend your stay 4 times for 30 days to a total of 6 months. This visa is a single entry and will automatically end if you leave Indonesia before 180 days.
Business Visa. This 1-year visa allows you to have multiple entries to Indonesia and stay up to 60 days each time. While you cannot earn a salary locally or be employed or contracted by any local company this will allow you to work online and earn an income. This visa is recommended for investors wishing to live in the villa and also rent it or do import/export.
Multiple Entry Visa. This visa is recommended if you want to come to Bali often and stay in your villa each time up to 60 days. The process, costs and validity is similar to the Business Visa, you are just not allowed to do any business related work in Indonesia. It's purely for visit and tourist purpose.
Retirement Visa. This visa is ideal if you are 55+ years of age; have a pension of minimum $1,500 USD/month, or at least $18,270 in savings to provide living expenses while in Bali and proof of health and life insurance. With this visa you’ll be able to stay in Bali for one year and renew for five more.
KITAS. This harder to get visa allows you to work in Indonesia. To obtain KITAS you need a sponsorship from a company. Your company of employment will have to apply for your KITAS. The work permit is called IMTA (which you can get after you have your KITAS). The KITAS can be valid for either 6 to 12 months and can be renewed. The company must be a legal business entity that is allowed to hire a foreigner.
As a buyer of a private villa in Bali you don’t need to pay sale tax, as the seller will pay them. You are only required to pay the Notary (lawyer) fee which equals to 1% of the value of the private Villa you purchased.
Once the Lease under your name you'll need to pay a minimal property tax equal to 0.01% a year.
In addition, you'll need to pay 10% tax on your Net Profit from your private villa if it is rented as a business. This tax is usually deducted from your tax obligation in your home country.