How to Buy Property in Bali as a Foreigner: Step-by-Step Guide by Investland Bali

Purchasing property in Bali is both exciting and challenging. Bali's stunning landscapes and rich culture present unique opportunities for investors and homebuyers aiming to acquire property. However, the process requires careful navigation. Thankfully, our real estate agents know all about the Bali property market, and acquiring property in Bali will be easy co-operating with us!

"After visiting Bali, I knew I wanted to move here and develop real estate," said Kristjan Ploompuu, a real estate developer and co-founder of Investland Bali. Along with his business partner Oliver Heliste, he is building luxury villas on the Indonesian island, offering Estonian retail investors an annual return of 15-50%. You can invest without leaving home. (https://rikas.geenius.ee/)

Today, we’re giving you a closer look at the property investment process.

How to Buy Property in Bali as a Foreigner: Is it Possible?

Yes, foreigners can invest in Bali’s real estate market. While there are certain restrictions on how foreigners buy property, we offer expert guidance on legal structures such as leasehold and freehold arrangements that allow non-citizens to invest and own properties in compliance with Indonesian regulations.

The following article provides a clear overview of the local real estate market, aimed at simplifying the purchase process. Our dedicated team at Investland Bali is committed to making your property-buying journey as smooth and enjoyable as possible.

But wait—I hate long texts... What's the easiest way for a foreigner to buy property in Bali?

Okay, here’s a short brief of what buying property in Bali looks like.

• Step 1: Once you've agreed on the price and terms, our legal team will draft the Preliminary Leasehold Agreement (PLA) for you to sign digitally, typically through DocuSign. Some of our new clients prefer to conduct due diligence (DD) before signing to review all details thoroughly. We are committed to making the DD process smooth and easy for you, so please don't hesitate to reach out with any questions or concerns.
• Step 2: After digitally signing the PLA, you'll make a deposit payment for the property.
• Step 3: Next, you make payments according to the payment plan.
• Step 4:
• A) Your designated representative, with Power of Attorney (PoA), will sign the lease agreement in the presence of a notary.
• B) Alternatively, you could combine work and leisure by flying out here to Bali to sign the documents in person.
• C) Obtain an apostille from your local notary’s office and send it to us.
• Step 5: After the agreement is signed, you'll need to make the final payment for your property investment as per your agreement.
• Step 6: Once the final payment is settled, the lease agreement will be transferred to you, officially making you the new owner of a leasehold property in Bali.

Ok, that’s it. You are now an official owner of Bali real estate! Buying property is quite Easy, right? And now—here’s an overview of the whole process for someone who appreciates understanding the entire process.

Understanding Property Ownership

Understanding property ownership in Bali is crucial for foreign investors looking to buy property in Bali. As a foreigner, you cannot own land in Bali outright, but you can own property on the land and secure a lease on the land itself. There are several types of property ownership in Bali, each with its own set of rules and benefits.

1) Leasehold Properties

Leasehold is a popular and legally recognized option for foreign investors looking to have property in Bali. This type of ownership allows you to lease the land for a specified period, typically 25 to 30 years, with options to extend, often up to 80 years in total. While leasehold does not provide full ownership of the land, it offers stability and flexibility, making it a common choice for foreigners looking to invest in Bali’s property market. Leasehold agreements must be carefully structured to ensure extension rights and legal protection.

2) Freehold Properties (Hak Milik)

Freehold properties, known as Hak Milik, provide full ownership rights and the highest level of control over a property. However, Hak Milik is only available to Indonesian citizens and cannot be directly owned by foreigners. Foreign investors who wish to acquire freehold property often use alternative legal structures, such as setting up a local PT PMA (foreign-owned company), which allows indirect ownership of land under Hak Guna Bangunan (HGB).

3) Hak Pakai (Right to Use)

Hak Pakai is a property ownership title that allows foreigners to own and use property in their own name, but only under certain conditions. This right is granted for an initial period of up to 30 years and can be extended to a maximum of 80 years. While it offers a legal right to use and occupy the property, it does not provide the same level of ownership as Hak Milik. Foreigners must hold a valid residence permit (KITAS or KITAP) to qualify for Hak Pakai, and the property must be designated for residential purposes, not commercial use.

By understanding these different types of property ownership, foreign investors can make informed decisions and choose the option that best suits their investment goals.

Choosing the Right Investment Structure in Bali

Deciding between leasehold and freehold depends on your property investment goals, budget, and legal eligibility. Foreigners must navigate Indonesian property laws carefully, and in many cases, setting up a foreign investment company (PT PMA) is essential for long-term ownership options.

Leasehold (Hak Sewa) – A Simple Option for Foreigners

Leasehold allows foreigners to lease property for 25–30 years, with possible extensions up to 80 years. It’s an affordable and flexible choice, ideal for rental income and investment. Unlike freehold, no company registration or residence permit is required. If used for business, the lease must be under a PT PMA to comply with regulations.

Setting Up a PT PMA (Foreign-Owned Company)

For those looking for a stronger legal structure, registering a PT PMA allows foreigners to secure property in Bali under Hak Guna Bangunan (HGB), which offers renewable rights for up to 80 years. The process takes 1–2 weeks, costs around €2,000, and requires an Investor KITAS (€1,000). While PT PMA does not provide Hak Milik (full freehold), it enables foreign investors to legally own and operate businesses on leased land.

Investland Bali, in partnership with ILA Global Consulting, ensures a seamless PT PMA application process, helping you navigate legal requirements and select the best structure for your business.

Selecting the Right Property in Bali Real Estate Market

Read our guide "5 Important Things You Need to Know Before Buying Property in Bali“ for specialised insights on different property types. Investing in Bali's property market offers numerous opportunities, but it is essential to understand the zoning laws and regulations. Various locations and property types offer differing investment returns. Conduct a background check on property zoning as understanding zoning laws is crucial for informed decisions and compliance.

• Yellow Zone: Ideal for residential purposes with potential for limited commercial activities.
• Green Zone: Suited for agriculture and conservation, with restrictions on most constructions.
• Red Zone: Perfect for tourism and commercial activities.

Read our blog: "Understanding Land Zones in Bali: A Guide for Investors and Developers"

Conducting Thorough Due Diligence

This is one of the crucial parts of purchasing property in Bali to be sure everything goes according to plan and you won’t need to deal with any surprises in the future. Before purchasing property in Bali, it is essential for foreigners to verify the property licenses to prevent scams. Fortunately for you, when you decide to purchase a property from us through the PLA agreement, you do not need to worry about these steps!

The due diligence process verifies property titles, checks legal compliances, and assesses physical and financial conditions. Understanding property taxes is also a critical part of the due diligence process, as it impacts the overall cost of the investment. Key questions include:

• Who legally owns the property?
• Are there any encumbrances or disputes?
• What are the specific zoning laws?
• What taxes are applicable and how might they impact your investment?

Financing and Regulatory Compliance

Investland Bali guides you through financing options and navigates foreign exchange regulations and property-related taxes. Foreign ownership in Bali is subject to specific legal frameworks and limitations that must be navigated carefully.

Taxes and Fees Involved in Buying Property in Bali

Buying property in Bali involves several taxes and fees that investors need to be aware of. The property transfer process must include payment of relevant taxes, including the Transfer Tax and Land Building Tax. Here’s a breakdown of the key financial obligations:

1. Transfer Tax (BPHTB)

• Rate: 5% of the purchase price of the property.
• Responsibility: Paid by the buyer.
• Details: This is a mandatory tax for transferring ownership rights and must be paid before the purchase agreement is finalized.

2. Income Tax on Property Sales (PPh)

• Rate: 2.5% of the purchase price of the property.
• Responsibility: Typically paid by the seller.
• Details: This tax applies to any income gained from selling a property in Bali.

3. Notary Fees

• Rate: Usually between 1% and 2.5% of the property value.
• Responsibility: Paid by the buyer.
• Details: Notary fees cover the preparation, verification, and witnessing of the purchase agreement, ensuring a legally binding transaction.

4. Registration Fees (Bea Balik Nama - BBN)

• Rate: Varies based on the property's location and size.
• Responsibility: Paid by the buyer.
• Details: This fee is required to officially register the property under the buyer’s name and ensure the ownership transfer is legally recognized.

5. Annual Property Tax (PBB)

• Rate: 0.1% to 0.3% of the property’s assessed taxable value.
• Responsibility: Paid annually by the property owner.
• Details: This ongoing tax is based on the government’s valuation of the land and building, making it an important long-term financial consideration.

6. Value Added Tax (VAT/PPN)

• Rate: 11% (increasing to 12% in 2025) on certain property transactions.
• Responsibility: Typically paid by the buyer.
• Details: VAT applies mainly to commercial properties, leasehold agreements, and new property purchases from developers.

7. Luxury Goods Sales Tax (PPnBM) (if applicable)

• Rate: 20% for properties valued above IDR 30 billion (~USD 2 million).
• Responsibility: Paid by the buyer.
• Details: This tax applies to high-value property transactions categorized as luxury assets.

8. Construction Tax (if applicable)

• Rate: 1.75% to 6% of the construction budget.
• Responsibility: Paid upon completion of new buildings.
• Details: This tax is calculated based on the official construction cost and applies to newly built properties.

Understanding these taxes and fees is crucial when buying property in Bali. Proper budgeting and planning for these costs will ensure a smooth purchase agreement process and long-term financial security. Consulting with legal and tax professionals can help navigate these obligations efficiently.

Finalizing the Purchase

Sign the Preliminary Lease Agreement & Make the First Payment (50%)

Before finalizing the purchase, a Preliminary Sales Purchase Agreement (PLA) must be signed (online through DocuSign) and the first payment of 50% is made.?

Final Payments and Change of Property Ownership

Continue making payments according to the payment plan. Once your new real estate is nearly completed and most payments are made, we'll finalize the deal!

Complete the Deed of Sale

Finalize the purchase by signing the Deed of Sale before a public notary. You can handle this personally or authorize us to complete the process on your behalf. Foreigners should avoid nominee arrangements, as they are illegal in Indonesia and can lead to serious legal complications.

The notary officially transfers ownership and registers the transaction with the National Land Agency (BPN). Once completed, you will receive your freehold or leasehold certificate, along with all necessary licenses and legal documents.

And, done! Buying property was not that hard, was it? Now, you can officially enjoy your new exotic Bali real estate!?

Are You Ready to Own Property in Bali?

Working with professionals is essential when buying property in Bali. A reliable real estate agent offers access to a wide range of properties, provides expert advice, handles paperwork, and ensures legal compliance, simplifying your investment process. Additionally, a property management company can manage your investment, taking care of tenant management and maintenance.

We offer the best terms and manage all contractual preparations to protect your interests. With over 10 years of experience, Investland Bali team members are your best choice of real estate agents. Let us guide you through each step of your property investment journey for a successful acquisition.

Contact us at [email protected] or on Whatsapp at +372 5683 2434 - we are always at your service.