4 March 2021
In Indonesia, land is legally acquired upon the execution of a Sale Purchase Deed (AJB) by the seller and buyer, or a Land Relinquishment Deed (APH) in favor of the buyer. An AJB is used if the buyer wishes to acquire certificated title to the land of the same type as the seller’s certificated title. An APH is used if the seller has certificated title to the land that is not the same type of title that the buyer can or wants to acquire, or if the seller does not yet have certificated title to the land to be sold.
An AJB or APH must be drawn up by a Land Deed Official (PPAT) having jurisdiction over the land and executed in the Indonesian language before the PPAT. Upon execution of the deed, the PPAT is responsible, on behalf of the buyer, for arranging certification and registration of the buyer’s title with the relevant land office.
Lease is granted based on a contractual arrangement crystallized in a lease agreement between the lessor and the lessee. The lease agreement may be privately drawn up, but it is strongly advised to have it executed in notarial deed form, as it provides stronger evidentiary value. The lease agreement, either privately drawn up or in notarial deed form, is not required to be registered to the land office.
Transfer of title of and security over apartment units is subject to separate procedures under Law No. 20 of 2011 Regarding Condominiums (10 November 2011).
Security interest over land in the form of security right must be registered to the land office. Upon registration it will be recorded in the relevant land certificate over which the security right is encumbered. The security right grantor and the grantee must first execute a Deed of Granting of Security Rights before a PPAT having jurisdiction over the land, along with the submission of the required documents (eg, original land certificate, original loan agreement between the security right grantor and the grantee, and evidence of property tax payment).
The typical fees associated with the transfer of land title are as follows:
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duty for the acquisition of rights over land and buildings, in the amount of 5% of the purchase price or such other amount as may be required by law, typically borne by the buyer;
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income tax, in the amount of 2.5% of the purchase price or such other amount as may be required by law, typically borne by the seller;
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value added tax, if the seller is a taxable entrepreneur, in the amount of 10% of the purchase price or such other amount as may be required by law, typically borne by the buyer;
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land and building tax (PBB) typically will be borne by the seller. The total amount of PBB paid is based on taxable object sale value less non-taxable sale value as applicable;
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sale of luxury goods tax, in the amount of 20%, which applies for the sale of a house, apartment unit, condominium, or townhouse with a purchase price of 30 billion rupiah or more, typically borne by the buyer;
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PPAT fees, usually borne in equal portion by the seller and the buyer, but the parties to the transaction are free to agree on the allocation of fees; and
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land office fees associated with the registration of the land certificate in the name of the buyer, which can be freely agreed on by the parties to the transaction but are typically borne by the buyer.
