Foreigners face restrictions when it comes to owning property outright in Bali, as Indonesian law prohibits non-Indonesian citizens from directly owning land. However, there are legal avenues for foreigners to secure property rights and investment in property in Bali.

  • Through an Indonesian Legal Entity (PT PMA)

 A foreigner can set up a foreign-owned company, known as a PT PMA (Penanaman Modal Asing), which can hold land under the Hak Guna Bangunan (HGB) title. This title grants the right to build and the right to use the land.

  • Leasehold Agreements (Hak Sewa)

Foreigners can enter into a leasehold agreement (Hak Sewa), which allows them to lease land or property for a specified period, typically ranging from 25 to 70 years. This lease can be registered in the foreigner’s name and is fully recognized and protected by Indonesian law.

  • Right to Use (Hak Pakai)

Foreigners can obtain the Hak Pakai title, which allows the use of land for residential purposes for an initial period of up to 30 years, with the possibility of extending it for an additional 20 years and then another 30 years.

A leasehold in Bali refers to a legal arrangement where a foreigner can lease land or property for a specific period, rather than owning it outright. The leasehold agreement, known as Hak Sewa, allows a foreign individual or entity to lease land or buildings for a predetermined period, typically ranging from 25 to 70 years. 

Leasehold titles are fully legal and protected under Indonesian law. The lease is registered in the foreigner’s name and grants them the right to use the property for the duration of the lease. The lease period is agreed upon by the lessor (landowner) and the lessee (foreigner). Leases can often be extended or renewed, depending on the terms set out in the initial agreement.

During the lease term, the lessee has the right to use the property for residential, commercial, or other purposes as specified in the lease agreement. They can also develop or build on the property, subject to local regulations.

Leaseholds have certain advantages, including providing a secure and legally recognised way for foreigners to invest in Bali’s property market without needing to establish a local legal entity, and it offers flexibility in terms of investment duration and usage.

However, it is important that foreigners conduct due diligence and work with reputable legal advisors to ensure that lease agreements are properly drafted and registered. Understanding local regulations and renewal terms is crucial to avoid future disputes or complications.

Freehold property ownership, known as Hak Milik, refers to the most complete and unrestricted form of property ownership available in Indonesia. It grants the owner full ownership rights over the land and any structures on it indefinitely.

Under freehold the owner has the right to use the land for any legal purpose, including building, farming, or leasing it out. The property, furthermore, can be sold, transferred, or inherited without restriction.

Only Indonesian citizens can hold freehold titles. Foreigners are not allowed to directly own land under a freehold title.

Hak Guna Bangunan (HGB), translated as “Right to Build,” is a property title in Indonesia that allows the holder to construct and use buildings on a plot of land they do not own. It is defined as a title that grants the right to build and maintain structures on a plot of land for a specified period.

The HGB title is typically granted for an initial period of 30 years and can be extended for an additional 20 years. After this, it can be renewed for another 30 years, allowing for a total duration of up to 80 years.

Both Indonesian citizens and legal entities, including foreign-owned companies (PT PMA), can hold an HGB title. This makes it a viable option for foreigners seeking to invest in property in Bali.

The holder of an HGB title has the right to construct, own, and use buildings on the land for residential, commercial, or industrial purposes, as stipulated in the agreement.

If the holder of an HGB title is an Indonesian citizen, they may apply to convert the HGB title to a freehold title (Hak Milik), which offers perpetual ownership. However, this conversion is not available to foreign entities.

An HGB title provides clear legal grounding and protection under Indonesian law. It ensures that the holder’s rights for both Indonesians and foreign investors – particularly through foreign-owned companies (PT PMA) – to use and develop the land are legally recognized and safeguarded.

Hak Pakai, translated as “Right to Use,” is a type of property title in Indonesia that allows the holder to reside on and use land and buildings on it owned by the state or another private party for a specific purpose and duration, but it does not confer ownership of the land itself.

Both Indonesian citizens and foreigners can obtain Hak Pakai titles. Foreign individuals and entities can hold this title, making it a feasible option for non-Indonesians looking to reside in Bali.

Hak Pakai titles are typically granted for an initial period of up to 30 years, which can be extended for an additional 20 years. After the extension period, it can be renewed for another 30 years, allowing for a total potential duration of up to 80 years.

The holder of a Hak Pakai title has the right to use the land for residential, commercial, or other specified purposes. This includes the right to construct buildings and make improvements on the land.

Hak Pakai rights can be transferred or inherited, although the specifics of transferability may be subject to local regulations and the terms of the original agreement.

The Hak Pakai title is recognized and protected under Indonesian law, providing the holder with legal assurance and security for the duration of the title, and is often used by foreigners who want to own a home in Bali without navigating the complexities of other ownership structures. It is also suitable for businesses and expatriates seeking a long-term, but not permanent, solution for property use.

When engaging in property transactions in Bali, both buyers and sellers are subject to various taxes. These include the following:

Taxes for buyers

Acquisition duty on Right of Land and Building (BPHTB)

  • Rate: 5% of the property’s sale value.
  • Calculation: It is based on the transaction value or the assessed value, whichever is higher, minus a non-taxable threshold (which varies depending on the region).

Value-Added Tax (VAT) on luxury goods (PPN BM)

  • Rate: Typically, 10% for new properties considered as luxury items.
  • Applicability: Usually applies to luxury properties or new properties from developers.

Notary fees

  • Rate: Approximately 1-2% of the property’s sale value.
  • Purpose: Covers the legal costs for processing the transaction and registration.

Taxes for sellers

Income tax on Sale of Land and Building (PPh)

  • Rate: 2.5% of the property’s transaction value.
  • Calculation: It is based on the sale price or the market value, whichever is higher.

Capital Gains Tax

  • Rate: Part of the income tax calculation but typically covered under PPh for property sales.
  • Consideration: Applies to the profit made from the sale of the property.

Other Associated Costs

Land and Building Tax (PBB)

  • Rate: Varies, but generally a small percentage (0.1-0.2%) of the property’s assessed value.
  • Responsibility: Usually paid annually by the property owner.

Transfer Fees

  • Rate: Varies depending on the region and the complexity of the transaction.
  • Purpose: Covers administrative costs associated with transferring the property title.

Yes, foreigners can use a company to buy property in Indonesia. The approach below provides a legal and secure way for foreign investors to own and develop property in Indonesia.

Establishing a PT PMA

A PT PMA (Penanaman Modal Asing) is a foreign-owned limited liability company in Indonesia. Such a company can legally acquire property under the Hak Guna Bangunan (HGB) title, which allows the company to build and use structures on the land. Foreigners can own up to 100% of a PT PMA, depending on the business sector and investment regulations.

Property Titles and Rights

Property ownership is made up in two categories:

Hak Guna Bangunan (HGB – Right to Build)

This Right to Build title allows the company to use the land for up to 30 years, extendable for another 20 years, and renewable for an additional 30 years. It is suitable for commercial and residential property development.

Hak Pakai (Right to Use)

The Right to Use title allows use of land for residential or business purposes for up to 80 years (30 years initial, 20 years extension, and another 30 years renewal). This can be held by foreign individuals and companies.

Steps to Establish a PT PMA

Establishing a PT PMA entails the following:

  • Legal setup: This step deals with the company formation. The PT PMA is registered with the Indonesian Investment Coordinating Board (BKPM) and serves to obtain the necessary business licenses and permits for the company’s operations.
  • Capital Requirements: An investment plan must be submitted, detailing the capital investment, usually a minimum of IDR 10 billion (~USD 700,000), though the amount can vary. A portion of the capital (paid-up capital) is deposited into the company’s Indonesian bank account as required by BKPM regulations.
  • Property acquisition: The property is identified and selected, and due diligence is conducted. The PT PMA then enters into a purchase agreement, and the property is registered under the company’s name./li>
  • Legal and administrative fees: Notary and legal fees are required and paid to cover the costs associated with setting up the company and acquiring the property. Relevant taxes are furthermore paid, amongst others Acquisition Duty (BPHTB) and income tax on the transaction.

Yes, property owners in Indonesia are allowed to legally operate small-scale tourist accommodation facilities such as guesthouses and homestays by means of a Pondok Wisata license. This license supports local tourism, ensures regulatory compliance, and provides a legal framework for offering lodging services. The application process involves meeting property standards, submitting necessary documentation, and undergoing inspections. This license is crucial for anyone looking to operate a tourist accommodation business in popular destinations such as Bali.

The property must meet certain standards set by local tourism authorities, including safety, hygiene, and basic amenities. Typically, the property should be in a designated tourism area.

A Pondok Wisata license is typically intended for Indonesian citizens. However, while foreigners cannot directly apply for a Pondok Wisata license due to Indonesian regulations, they can be involved in such businesses through the following indirect means:

  • Spousal ownership: Through an Indonesian spouse.
  • PT PMA: Setting up a foreign-owned company for larger operations.
  • Local partnerships: Partnering with Indonesian citizens who apply for the license.

Regardless of the ownership structure, the property must meet all regulatory standards for tourist accommodations, including safety, hygiene, and amenities.

Running a holiday rental villa or guesthouse in Bali as a foreigner involves navigating Indonesian property and business regulations. The following options are available:

  • Setting up a PT PMA: A foreign-owned company can acquire property and operate accommodation.
  • Using spousal ownership: Properties can be owned by an Indonesian spouse who applies for the necessary licenses.
  • Partnering with an Indonesian citizen: Local partners can handle ownership and licensing.
  • Leasing property: Acquiring a leasehold title and ensuring all operational licenses are in place.

Applying for a Pondok Wisata License in Bali involves the following steps:

  • Determine eligibility: Ensure the property is owned by an Indonesian citizen and is suitable for tourism use.
  • Prepare the required documentation: Gather proof of ownership, building permit (IMB), zoning compliance, and personal identification.
  • Submit the application: Submit the application and required documents to the local tourism office.
  • Property inspection: Local authorities inspect the property.
  • Payment of fees: Pay the necessary licensing fees.
  • License issuance: The Pondok Wisata license is issued.

It is important to continuously adhere to local standards for safety, hygiene, and hospitality to ensure the ongoing validity of the license.

Bali’s land zoning categories include Residential (R), Commercial (C), Tourism (T), Agricultural (A), Industrial (I), Public and Social Facilities (P and S), Conservation and Green Zones (K and G), and Special Use Areas (SU). Each zoning category has specific regulations and permissible uses, influencing development and land use planning. Understanding these zones is crucial for property development, investment, and compliance with local regulations in Bali.

Choosing where to live in Bali depends on your lifestyle preferences, work location, family needs, and desired environment. Here are some of the popular areas to consider:

  • Ubud: Ubud is a cultural and artistic hub known for its lush greenery, traditional arts, and spiritual ambiance. It is popular with expatriates seeking a serene and culturally rich environment. The area features many yoga studios, wellness centres and organic restaurants. It has a strong community of artists, writers, and creatives and is suitable for families as there are several international schools nearby. Overall, the area is peaceful and nature-oriented, with a vibrant cultural scene. It has, however, less nightlife compared to coastal regions, and can be crowded with tourists in central areas.
  • Seminyak: This chic, trendy and vibrant area is known for its upscale resorts, fine dining, and boutique shopping. It is popular with younger expatriates and those looking for a luxurious lifestyle. Seminyak offers high-end restaurants, bars, and clubs, is close to the beach with beautiful sunsets, and has numerous villas and luxury accommodation options. The area has a trendy and sophisticated atmosphere and offers excellent dining and nightlife options. It has a higher cost of living than some of the other areas in Bali, though, and can be busy and touristy.
  • Canggu: Hip and surf-friendly, Canggu is a rapidly growing area popular with surfers, digital nomads, and young families. It is known for its laid-back vibe and creative community, and features surf-friendly beaches such as Batu Bolong and Echo Beach, numerous coworking spaces, cafes, and organic markets, and is family-friendly with international schools and community activities. Canggu is trendy, yet with a relaxed atmosphere, and is good for outdoor and fitness activities. On the downside, though, some areas in Ganggu are still being developed, while the area is experiencing increasing traffic congestion.
  • Sanur: Family-friendly and peaceful describe this quieter, family-orientated area with a more relaxed pace of life. It is popular with retirees and families. Sanur has calm beaches with a long boardwalk, plenty of family-oriented restaurants and activities, and a good selection of international schools and healthcare facilities. The area is peaceful and safe, and is less crowded than the other tourist areas. It has limited nightlife and entertainment options, though, and some parts can feel too quiet for those seeking excitement.
  • Uluwatu: Uluwatu is known for its dramatic cliffs, stunning beaches, and top surf spots, and attracts surfers, beach lovers, and those seeking a quieter life. It features world-famous surf breaks like Padang Padang and Uluwatu Beach, has beautiful cliffside resorts and villas, and is more remote with a focus on natural beauty. Uluwatu has stunning coastal scenery and is excellent for surfing and outdoor activities. It is less developed in terms of amenities, though, and can be far from commercial centres and schools.
  • Jimbaran: Coastal luxury describes Jimbaran best. It is a picturesque coastal area known for its seafood restaurants and luxury resorts, and popular with expatriates seeking a quieter yet upscale lifestyle. Jimbaran has beautiful beaches and a famous seafood market, is within proximity of luxury hotels and villas, and conveniently located near to Ngurah Rai International Airport. It is a luxurious and serene environment with good dining options and beach access. On the other hand, it has limited nightlife, and can be more expensive.
  • Nusa Dua: This exclusive and quiet area is known for its gated resort communities and pristine beaches, and is ideal for those seeking exclusivity and tranquillity. It has luxury resorts and golf courses, quiet, clean beaches with clear waters, and high-end shopping and dining options. It is a secure and well-maintained area, great for relaxation and luxury living. It can, however, feel isolated from the rest of Bali, and has a higher cost of living.

Buying property in Bali as a foreigner involves understanding local regulations, choosing the right type of property, and navigating the legal process. Below are the key points to consider.

  • Understand the legal restrictions as far as foreign ownership and property titles go.
  • Choose the type of property – residential property (villas, houses, and apartments), or commercial property (shops, hotels, and rental properties).
  • Appoint a reputable real estate agent with good local market knowledge, who can help you navigate the legal requirements, and ensure that all necessary paperwork is in order.
  • Conduct due diligence. This includes inspection of the property, verifying land titles, and appointing a legal advisor.
  • Set up a PT PMA (if applicable).
  • Negotiate and agree on terms which include the purchase price, payment terms, and leasehold terms, if applicable.
  • Draft and sign the sale and purchase agreement (SPA), involving a local notary (Pejabat Pembuat Akta Tanah – PPAT) who will legalise the transaction.
  • Complete the payment, as well as payment of taxes and other fees such as notary fees, legal fees, and administrative costs.
  • Transfer of ownership by finalising the transfer and receiving the title deed.
  • Manage the property and ensure ongoing compliance with local regulations and taxes.

When owning property in Bali, there are several taxes that property owners must be aware of. These taxes can vary depending on whether you are buying, owning, or selling property. Below is a breakdown of the key taxes property owners must pay in Bali.

  1. Taxes when buying property
  • Land and building acquisition duty (BPHTB). Rate: Typically, 5% of the property’s sale value or taxable sale value (whichever is higher). This tax is payable by the buyer upon acquisition of the property.
  • Value-Added Tax (VAT). Rate: 10%. Applicable if you are buying property from a developer. It is included in the sale price for new properties.
  1. Taxes during property ownership
  • Land and Building Tax (PBB). Rate: Varies, generally 0.1% of the sale value of the property (determined by the local government). This annual tax is calculated based on the value of the land and buildings. Property owners receive a tax assessment notice each year.
  • Income tax on rental income (PPh): Rate: 10% of the gross rental income. If you rent out your property, this tax is applicable on the rental income you earn. Both individuals and companies (such as a PT PMA) must pay this tax.
  1. Taxes when selling property
  • Income tax on property sale (PPh Final). Rate: 2.5% of the gross sale price. This tax is paid by the seller upon the sale of the property. It is a final income tax on the proceeds from the property sale.
  • Capital Gains Tax (if applicable). Rate: Generally, 20% for individuals and 25% for companies, but often included in the final PPh tax. Note: If the property sale generates capital gains, this tax applies. However, it is often covered under the 2.5% PPh final tax.

Additional considerations

  • Tax advice: It is advisable to seek professional tax advice to ensure compliance with local regulations and optimize your tax obligations.
  • Legal compliance: Always ensure that all transactions and tax payments are well-documented and compliant with Indonesian law.
  • Foreign ownership: Foreigners typically own property through a leasehold or a PT PMA structure, which might have additional regulatory and tax implications.

Investing in property in Bali can be a lucrative venture, but it also has opportunities and challenges to take note of. Here are some key factors to consider when determining if Bali property will be a good investment for you.

A growing tourism industry


  • Bali is a top tourist destination, attracting millions of visitors annually. This drives demand for rental properties, especially vacation rentals and holiday homes.
  • High occupancy rates and premium rental prices during peak seasons can generate substantial rental income.


  • Tourist seasons can fluctuate, affecting occupancy rates and rental income during off-peak periods.

Attractive property prices


    • Property prices in Bali are often lower than in other popular tourist destinations, offering potential for capital appreciation.
    • From luxury villas to budget apartments, Bali offers a wide range of property types to suit different investment budgets.


      • Property prices can be influenced by economic conditions, political stability, and regulatory changes.

High rental yields


    • Properties in prime locations such as Seminyak, Canggu, and Ubud can yield high rental returns, sometimes reaching double digits annually.


    • High rental yields can be offset by property management and maintenance costs, especially for luxury properties.

Favourable investment climate


    • An increasing number of expatriates and digital nomads choose Bali for its lifestyle and cost of living, boosting demand for long-term rentals.
    • Development of infrastructure, including international schools, healthcare facilities, and coworking spaces, enhances the attractiveness of Bali as an investment location.


    • Foreigners face restrictions on direct property ownership and must navigate complex legal frameworks to invest.

Economic and political stability


    • Indonesia’s growing economy and government support for tourism and infrastructure development positively impact the property market in Bali.


    • Changes in property ownership laws or taxation policies can affect the investment landscape.

Diversification benefits


    • Investing in Bali property can diversify your investment portfolio, offering exposure to a unique market.


    • Real estate investments are generally less liquid than other asset classes, making it more challenging to quickly sell the property if needed.

Tips for investing in Bali property

  • Conduct thorough research: Understand the market trends, property values, and potential rental income in different areas of Bali.
  • Choose the right location: Prime locations such as Seminyak, Canggu, Ubud, and Nusa Dua tend to offer better returns on investment.
  • Engage local experts: Work with reputable real estate agents, legal advisors, and property management companies to navigate the complexities of the Bali property market.
  • Understand legal structures: Familiarise yourself with the legal structures for property ownership by foreigners, such as leasehold agreements and PT PMA setups.
  • Consider long-term prospects: Evaluate the long-term potential of the property, including factors like future infrastructure development and tourism trends.
Bali attracts a wide range of investors due to its thriving tourism industry, beautiful landscapes, and appealing lifestyle. This diversity of investors reflects Bali’s broad appeal and investment potential. From international investors and expatriates to local Indonesian entrepreneurs and institutional funds, each group brings different motivations and investment strategies, such as the following:
  • International investors: Focus on tourism, real estate, and lifestyle investments.
  • Expatriates and digital nomads: Invest in residential properties and small businesses.
  • Local Indonesian investors: Expand businesses and develop residential projects.
  • Institutional investors: Engage in large-scale developments and infrastructure projects.
  • Retirees: Seek affordable, peaceful retirement homes with potential rental income.
Each of these investor groups contributes to Bali’s dynamic and growing property market, leveraging the island’s unique opportunities and vibrant economic landscape.
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