Whether it’s better for a foreigner to buy property in Indonesia as an individual or as a company depends on a number of factors, including personal preference and financial circumstances.
Here are some pros and cons of both options:
A) Individual ownership:
Pros:
• Simplicity: Individual ownership is straightforward and requires less paperwork and formalities.
• Flexibility: Individual ownership allows for more personal control and decision-making regarding the property.
• Lower costs: Individual ownership typically involves lower upfront costs and fees.
Cons:
• Restrictions: Foreigners may face restrictions on the types of properties they can purchase and own as an individual.
• Risk of personal liability: If the property is used for business purposes, the individual owner may be personally liable for any legal issues or debts.
B) Company ownership:
Pros:
• Wider range of properties: Owning property through a company may provide access to a wider range of properties that may not be available for individual ownership.
• Liability protection: Company ownership offers limited liability protection for the owners, separating personal assets from business assets.
• Tax benefits: Owning property through a company may offer tax benefits and more favorable tax treatment compared to individual ownership.
Cons:
• Complexity: Company ownership involves more paperwork, formalities, and regulations.
• Higher costs: Company ownership typically involves higher upfront costs, such as company formation and registration fees.
• Less flexibility: Company ownership involves more rules and regulations, which may limit personal control and decision-making regarding the property.
It’s recommended to consult with a local lawyer or property expert to understand the specific regulations and requirements for foreign property ownership in Indonesia, as well as to review your individual financial circumstances and goals to determine the best option for you.
The main recommendations for foreigners regarding safe property ownership in Indonesia:
- Hire a reputable advisor: Engage a local advisor who has experience in helping foreigners with property ownership in Indonesia. They should be knowledgeable about the local laws and regulations and can assist with due diligence, property inspections, and negotiations.
- Familiarize yourself with the laws and regulations: Make sure to read and understand the regulations related to foreign property ownership in Indonesia, including the Foreign Investment Law, Land Law, and Property Tax Law. It’s also important to know the restrictions on property types and ownership limits for foreigners.
- Consider setting up a local company: Setting up a local company can provide greater protection and flexibility in terms of property ownership and can help you comply with the regulations. Your legal advisor can assist you with the process of setting up a company, and advise on the best type of company for your needs.
- Conduct thorough due diligence: Before making a property purchase, thoroughly evaluate the property, including reviewing the title, inspecting the property, and confirming the property is free of liens or other encumbrances. Your consultant can assist you with this process and advise on any potential risks.
- Seek professional advice from a tax consultant or financial advisor: In addition to engaging a local legal advisor, consider seeking advice from a local tax consultant or financial advisor to ensure you fully understand the tax implications of property ownership in Indonesia.
- Ensure proper documentation: Make sure all necessary documentation is in order, including the property title, land certificates, and building permits. Your legal advisor can assist you with reviewing and verifying these documents.
- Keep up-to-date with the latest regulations: Stay informed and up-to-date on the latest developments in the regulations related to foreign property ownership in Indonesia. Your legal advisor can provide regular updates on any changes to the regulations and help you stay compliant.
These recommendations are specific and should be considered when planning to purchase property in Indonesia as a foreigner. It’s important to remember that the specific regulations and requirements can vary based on the location of the property and individual circumstances, so seeking professional advice from a local legal advisor is recommended.
