ALL YOU NEED TO KNOW ABOUT FREEHOLD TAX

ALL YOU NEED TO KNOW ABOUT FREEHOLD TAX

When buying and selling land and buildings, both the buyer and seller will be taxed. The seller will be subject to income tax (PPh) on the payment of the land price he receives (also known as seller tax), while the buyer will be subject to the Land and Building Acquisition Fee (BPHTB) for the acquisition of his land rights (also known as the buyer’s tax).

Income Tax (PPh) / Seller Tax

Previously the tax obligation for the seller was 5% of NJOP (government assessment) or sale value, but now it has been halved to 2.5%. Seller pays PPh at 2.5% based on the sale price or government assessed value, whichever value is the highest.

Land and Building Transfer Duty (BPHTB) / Buyer Tax

The land and building transfer duty is levied at a flat rate of 5%, and is charged to the buyer. The 5% duty is calculated based on the transaction value or the assessed value.

BPHTB = (Transaction Value – Non Taxable Income Tax Value *) x 5%

* NPOPTKP in each region depends on local government policy (min. Rp 60,000,000) and it is only valid for the first purchase of the year. It will not be applicable should the purchaser purchases a 2nd property in that same year.

TAX ON ACQUISITION OF LAND AND BUILDING (BPHTB)
Property ValueIDR5,000,000,000
Less:Tax-Exempt AmountIDR60,000,000
=Taxable ValueIDR4,400,000,000
Tax on Acquisition of Land and Building5%220,000,000

Luxury Good Tax

The sales of luxury brand new property is subject to 20% tax. Luxury good can be defined as a brand new property such as house, townhouse, villa which is valued at the price of IDR 20 bill and above. And / or Brand new apartment or condominium with the selling price of IDR 10 bill and above.

What is a brand new property? A Property that has never been lived in. You may sometimes see homes that are fairly new but have already been owned and lived in by someone else described as ‘new-build’, but it can’t be classified as brand new because brand new is about houses and flats that have not yet been bought or lived in by anyone.

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