- Costs of buying a property
When buying a Balinese property, a foreigner must pay:
⇒ VAT. The rate is 11% of the price specified in the contract. VAT is paid by the buyer when purchasing property from the developer.
⇒ State duty and notary fees. The fee for registration of the right of use is 5% of the estimated value, fees are another 0.5%.
⇒ Insurance. Let us stipulate that in Indonesia, property insurance is not mandatory, but we are talking about owning a property in a seismically active zone. Insurance will help protect investments in an unforeseen situation. The amount of payments is up to 0.5% per year of the value of the property. Thus, the buyer should add about 17% to the initial cost of the property.
2. Property Ownership Taxes
Regardless of whether the owner of the property is a resident of the country or not, he/she is obliged to pay property and land taxes, the amount of which is:
⇒ 0.5% of the assessed value of the house (apartment) — property tax;
⇒ up to 0.2% depending on the region — land tax.
The payments we have considered are mandatory and are paid annually. Please note: if you plan to sell the property and leave the country forever, you must deregister from the tax register yourself.
3. Taxes when renting out housing
Investors who plan to earn income in Bali from renting out housing are not exempt from tax obligations and are required to pay 10% of the amount. It is worth noting that in tourist areas of the city, it is common practice for the tax to be included in the rental price and paid by the tenant.
- 4. Utilities
One of the most significant items of property maintenance expenses. The owner of the property pays monthly for:
⇒ electricity;
⇒ water supply;
⇒ garbage removal.
The amount of “utilities” depends on many factors, primarily on the size of the property and the equipment in operation (air conditioning, “Smart Home” system, etc.). Note that in most cases, electricity is paid separately on a deposit basis. If the balance becomes zero, the electricity in the house is turned off.
The average bill for utilities is EUR 130 per month for apartments. If we are talking about a villa with a pool and other amenities, then the amount of utilities can reach EUR 350-450.
⇒ The Internet, like utilities, is paid monthly in Bali. There are many tariffs and several types of connections that affect the cost of payments. If you take average checks, then the Internet will cost 15-30 EUR.
⇒ Cleaning is another rather large expense item. If the owner uses the services of a professional cleaner, then he should be ready to spend 30-120 EUR monthly.
- 5. Property management
Most investors prefer not to waste time and effort on finding tenants and maintaining the property, but entrust these tasks to the management company. The advantage is that the management company, with the right strategy, can increase the annual income from renting out housing by 5 percent or more. Many management companies not only manage, but also advertise the property, which ensures high occupancy.
The commission size, on average, is 20-30% of the rent. The owner is relieved of all worries: he receives a monthly report and income minus the company’s commission and other mandatory payments.
