Ownership/contracts/permits and taxes
One of the first questions we are asked when we talk about buying land or property is the question of ownership. How is this organized in Indonesia? Can a non-Indonesian legally own land our property? The answer is no. Non-Indonesians cannot (yet) but there are legal ways to make a contract with (an Indonesian citizen, called a nominee ) that have proven to be safe and give you all the rights and legal protection for your investment you would want to have as the owner of your own land/property.*
It is of the highest importance that you always clearly understand the content of the documents that are used in the transactions. We will always work with translations of the agreements in the English language.
*We would like to add to this that in case of “foreign investments” made by foreign-owned investment companies other laws apply.
What is the solution for non Indonesian citizens to own land in Indonesia and legalize their investments? Click here.
This contract consists of 4 documents that contain the following agreements:
- Loan Agreement: the acknowledgment that the foreigner has lent the purchase price of the land to the nominee.
- Right of Use Agreement: This gives the foreigner the allowance to use the land.
- Statement Letter: In this letter the nominee acknowledges the loan and the foreigners’ intention to own the land.
- Agreement: This is an agreement between the nominee and the foreigner concerning commissions or other fees that have to be paid. It also describes the agreements between the nominee and the foreigner concerning obligations of the Indonesian regarding transfer of the land.
How to “translate” these 4 steps?
- The foreigner gives the money to purchase the land to the nominee who will then
- give the land (house) to the foreign person for use and describes arrangements in case the foreign person wants to sell the land.
- Describes the “ownership” status. The foreigner has the right to lease or rent out the property.
- It is the duty of the nominee to always help/ co operate the foreign counterpart when it comes to selling the property. Also, as official owner of the land the nominee is responsible for the care of the property so all nuts connected will go directly to him.*
*We will help you making the right arrangements for payments.
To make this construction legal there has to be compensation for the nominee. In case you wish
Ijin mendirikan bangunan-IMB/BUILDING PERMIT
A common pitfall for unwary property buyers in Bali is the fact that, while there are enough professional developers that do the right thing, there are quite a number that start building before they have obtained an IMB. This is illegal.
After the land certificate the IMB is probably the most important document regarding properties in Indonesia. The building permit is not only a permit to carry out the initial building but it also continues through the building’s life as a registration document. The permit defines the specification of the building and the purpose the building can be used for.
With the IMB comes a metal plate rather like a car number plate to be mounted at the front of your building.
To get an IMB it is necessary to submit a pile of documents that will include the following.
- A land certificate including the relevant survey pan.
- An ijing kavling (permit to subdivide) if one is needed
- Correct land zoning for the building that is planned
- Drawings of the buildings that comply with local building regulations
- Structural and services drawings to make sure that the buildings have been properly designed and specified
NOTE: You need an IMB in order to be able to obtain a “Pondok Wisata”; which is the license that one needs in case you want to rent out your property to gain profits out of it.
Want to learn more?
Home ownership can get tricky in Indonesia as a foreigner. Make sure you are doing everything right before you begin. Get in touch with Law Office Lovina for a consultation to learn everything you need to know.
City house for sale in Singaraja
This two floor house has a lot of potential for improvement. After some simple renovations this villa can become your dream home. It is perfect for a family who wants to be in Singaraja city and close to all of the markets, shops, restaurants and schools.
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Lovina Villa Property (CV Panorama Lautan Bali)
Jalan Raya Singaraja - Seririt