Leasehold.
1.Hak Sewa «leasehold».
2.Unconditional right of ownership — Hak Milik «freehold»
1.Long-term lease — Hak Sewa «leasehold» confirmed with a notary. It is used when purchasing ready-made real estate.
A regular leasing contract is concluded between the owner and the investor.
It can be notarized, but is not registered with the relevant authorities, which differs from Hak pakai.

Lessee.
A natural or legal person.

Term of possession.
The term of Hak Sewa is not regulated by law, accordingly, no one prevents the parties to conclude it for 100 years prescribing the procedure for the transfer of rights and obligations by inheritance.

Right of Possession.
In this case, a regular leasing contract is concluded between the landlord and the investor.
It can be notarized but is not registered with the relevant authorities, which is different from a Hak pakai.
The lease does not need to be notarized — it is sufficient to be signed by two witnesses and stamped.
It is important that the lease agreement has, among other conditions, a clause regulating the need for the landlord to independently pay tax on the income received.

Taxes.
With Hak Sewa agreements, income tax liability arises only for the landlord (10%), but real estate taxes, annual land taxes are paid by the tenant.

Recommendation.
Hak Sewa agreement is used when acquiring a plot of land with a constructed property. After obtaining a plot of land on lease for the construction of a new object — another lease agreement is required — Hak Pakai «right to use» allowing to obtain permission for the construction of a new object.
2.Right to use — Hak Pakai «right to use» with registration at the notary, in the state authorities with the issuance of a certificate. It is used in the construction of new real estate.
Exclusive right for a foreigner to use the land, and this exclusive right is legally secured by issuing a certificate, which must be registered with the state authorities.

Lessee:
A natural or legal person.
Term of possession
Up to 80 years (initial term of 30 years + extension for 20 years + extension for 30 years).
Right of Possession:
When a foreigner acquires a property, he or she is issued a certificate stating his or her name in the «holder of the exclusive right to use» or Hak Pakai column.

In this case, at the time of issuance of such a certificate, the previous owner is completely deprived of the rights to use it and to perform any operations with it, which means that the foreign buyer is fully protected from legal risks.

Purchasing under the contract Hak Pakai requires the existence of a company in Indonesia and holding of KITAS visa, which can be issued for owners or employees of legal companies registered in Indonesia.

Taxes:
For tax residents of Indonesia, Tax on the sale of the property to another person will be 11% of the total value.

Recommendation:
Hak Pakai contract gives the opportunity to obtain a building permit for a new facility, so it is recommended for those who need to build a new facility on their property .

Ownership.
Unconditional right to ownership — Hak Milik «freehold».
Rarely used.
Under Indonesian law, the ownership of land in this country can be held by individuals — citizens of Indonesia or legal entities — companies whose owner can be a citizen of any country.

Owner:
A legal entity.
Term of ownership:
Under this type of contract, the ownership right has no limitation on the term.

Right of ownership:
Under this type of contract, the company and the founder /founders are transferred full ownership of the land and facilities on it.
Taxes:
Taxes on purchase and sale are 11% of the cadastral value each. At the same time, most often, the tax is divided 50/50% between the seller and the buyer.

Recommendation:
This option of land ownership is many times higher than under a long-term lease agreement and is mostly used for construction on plots of land of a hectare or more — hotel complexes or villa complexes. In some cases, this type of land ownership can be with plots of 200 m2 of land, but it is very rare.

The purchase of real estate on a natural person is certified at the notary and amounts to 1% of the value of the object.

The purchase of real estate for a legal entity is registered with a notary, which is 1% of the value of the object and with the state local authorities of the district.

It is possible to execute the transaction remotely, if the sale of the object is carried out in «Leasehold», i.e. the land under the object of real estate is in a long-term lease. When the necessary documents are prepared, namely the investment agreement, the contract is sent to the buyer, the buyer signs the contract with photo and video fixation, the signed contract is sent to the developer or the owner of the object, then this contract is to be signed in Bali by the developer or the owner of the object.

The buyer transfers money, the transaction is notarized, then the original documents are sent to the buyer.

In the registration of real estate on a legal entity or in the registration of the object in «freehold» (ownership), personal presence is mandatory, remote deal is impossible in this case. There is also a practice of signing documents by means of electronic signature.

When investing in real estate before the start of construction and selling immediately after construction — the expected profit will be 30% to 40% within a year.

When renting out — the expected profit is 12% to 20% per year and payback from 5-7 years.

Payment can be made in any way convenient for the buyer:
swift-transfer of different banks, cash in dollars, as well as there is an option to transfer funds in cryptocurrency. All payment methods are discussed at the time of the transaction, our company provides all kinds of support and monitors the safety of the transfer of money.

There are also developers who have a service of crypto-transfer that costs 1% of the cost of the object. We approach individually to each specific case and provide the most favorable and safe way of payment for our buyers.

The tax on the purchase of real estate is 10%, most often this % is already included in the price of the property. Some developers offer either to split this percentage 50/50, or to pay the full amount.

When registering the transaction, 1% of the amount of the contract is to be paid to the notary.

If we talk about the annual real estate tax, then a payment of 0.1-0.2% of the market value of the object is provided. In order to determine it, it will be necessary to conduct an appraisal. The specific amount depends on the value of the object. Wealthy citizens pay more. If the property is valued at more than 1 billion Indonesian rupiah ($66.9 thousand, or 5.017 million rubles), the rate is 0.2%;

Tax on rental income. If an expat rents out a property, he is liable to pay tax. Its amount will be 11% — if the transaction is between individuals, 20-25% — if the expat works in Bali as a legal entity.

Tax on the sale of luxury real estate. If the estimated value of the object exceeds 30 billion Indonesian rupiah (a little more than $ 2 million, or 139.2 million rubles), the owner will pay 20% of the transaction amount.

Mandatory fees:
Electricity, water, internet — average price for a two-bedroom villa is $100-$150 USD

Additional fees:
Maintenance staff including pool maintenance — 200$ per month.
If you want to rent out the property remotely, the average cost of maintenance by the management company will be 10% — 30% of the revenue from the property.

A management company fully services your property, which includes:
— Ensuring occupancy as a consequence of marketing activities — average of 80%
— Changing of linen
— Housekeeping
— Maintenance of the building, pool and equipment.
— Payment for electricity, water and internet.
— Transfer of investor’s income to the investor’s account.
— Thus, thanks to the management company, the property owner does not need to maintain their object themself
— The services of a management company range from 10% to 30%.
— It is usually 30% for hotel complex where property insurance is included.
— Homeowner can independently manage their property, then he will need to pay for utilities (water, electricity), internet, pool maintenance, which on average for a two-bedroom villa costs $ 300 — $ 350 per month.

How is it possible to check whether the property can really be rented out with 12-20% per annum and pay back in 5-7 years?
To check if real estate investments really give such returns, we recommend checking the rental prices in the booking application.
You can do it yourself using the following algorithm:
Suppose you are planning to invest $200,000 for a villa on a plot of 200 meters.
1.Identify similar properties.
In the booking application specify the region where you want to invest in a property, for example Changgu, specify the rental period of a month and you will see properties with prices.
Look for properties with similar size and quality of finish.

2.You will see approximately the following options:
1 176 $
3 955 $
2 515 $
8 381 $
5 548 $
8 458 $
7 905 $
3 593 $
5 290 $
6 200 $
On average, the rental price per month for properties with similar area and location, but obviously with a worse finish will be $5,005 per month. Round it to $5,000 per month. Thus you have determined the amount of revenue that you can confidently receive per month.

3. Take into account the occupancy rate.
The obtained result of 5 000 $ multiply by 80% (occupancy of the room stock) = 4000$ per month.

4.Consider the expenses.
You will delegate all expenses to a management company for 20% of revenue — $800 per month. Before taxes, the income will be $3,200.

5.Consider the tax for renting out the property.
The tax will be 11% — $352.
That is, the estimated profit will be 2,848 $

6.Calculate the return on investment.
Now divide the investment amount of $200,000 by your income per month of $2,848 and by 12 months per year. You will see the payback period for the facility. In this example, the payback period is less than 7 years.
200,000/ 3,200 / 12 = 5.8 years.

If you invest in the construction of a villa or apartment up to 200 m2 in a good location before you buy the land and start of construction, in most cases you can sell it with a markup of 30% to 50% within a year — on your own, with us, or through a third-party real estate agency.

Of course, it is your property, so you can stay in it at any time and for any period of time (some MCs specify the maximum period of stay of the owner), the main thing is to ensure that the property is not rented out or is not reserved by your guests.

If the property is managed by a management company, warn them in advance about the date and time of your arrival.

Once the transaction documents are signed, the Long Term Lease Transfer Certificate and the documents attached to it must be made within seven days. The registration is implemented by the Pejabat Pembuat Akta Tanah Authority (PPAT). The buyer will eventually receive:

• Proposal for the registration of the Long Term Lease Transfer Certificate
• Original of the transfer deed
• Original of the latest land and building tax receipts and proof of payment.
• Original land certificate
• Proof of payment of all required taxes
• Copies of seller’s and buyer’s IDs

The whole transaction usually takes a month. After signing the transaction documents, the seller usually transfers the long-term lease right to the land to the buyer while the remaining documents are still being prepared.

We check thoroughly every property we offer.

We carry out Due diligence (due diligence is a procedure of making an objective representation about the investment object, which includes investment risk assessment, independent evaluation of the investment object, comprehensive research of the company’s activity, comprehensive verification of its financial condition and market position).

It is mandatory that we request and verify the following documents from each real estate developer or private seller:

• Five recent land and building tax receipts and proof of payment.
• Original land certificate
• Original building permit
• Proof of payment for water, electricity, telephone
• In case of mortgage, Roya letter from the bank
• Copy of ID of directors and representative in case the seller is a company
• Protocol of the participants meeting with the decision to sell, notarized if the seller is a company.
• The buyer in their turn provides the following papers:
• Passport/ID
• Copies of IDs of directors and representatives, if the buyer is a company
• All company documents if the buyer is a company

Based on the information provided, together with the notary and the lawyer, we conclude whether the object is suitable for us or not.