Buying property in Bali as an Australian: the ATO, the tax offset and CGT

Can Australians own property in Bali?

You can, just not freehold. Freehold title (Hak Milik) belongs to Indonesian citizens under Article 21 of the Basic Agrarian Law (5/1960), whatever the buyer's nationality. That leaves three routes: a notarized leasehold, Hak Pakai once you hold a KITAS or KITAP, or a company of your own (PT PMA) that holds the right to build, HGB.

The Australian pull on Bali is hard to overstate. BPS Bali counted 1.63 million Australian arrivals in 2025, 23.44% of the island's 6,948,754 foreign visitors and well ahead of India in second place. Perth is about 3 hours 40 minutes away by direct flight and Darwin under three, while Melbourne and Sydney take about six.

Most Australians who buy end up on a leasehold, like almost every listing in our catalog. Extensions happen only where the contract provides for them. Read our guide to leasehold extensions before you compare two lease prices. Skip any offer to put the land in an Indonesian's name, because nominee deals are void from the start under the 1960 law's Article 26(2).

How the ATO taxes rent from a Bali villa

As an Australian tax resident you're taxed on worldwide income, so Bali rent goes in your return at item 20 of the supplementary section, foreign source income. You declare the gross amount before Indonesian tax, then claim that tax back as an offset. Convert each amount at the rate on the day you earned it, or use the ATO's average rates for the year.

Indonesia moves first, withholding a flat fifth of every rent payment from owners who live abroad. That's PPh 26, and it applies to the gross figure. The Australia–Indonesia tax agreement, signed April 22, 1992 and in force since December 12, 1992, leaves Indonesia free to do that under Article 6.

Deductions follow the Australian rules. Interest, management fees and repairs are deductible, and the building qualifies for the 2.5% capital works deduction under Division 43. Two limits from 2017 reach offshore property too: you can't deduct travel to inspect a residential rental, and you can't depreciate second-hand plant and equipment that came with an established dwelling.

Source: ATO, Foreign source income and foreign assets or property, supplementary instructions 2026; ATO, Translation of foreign currency rental income; Income Tax Law (Indonesia), Article 26; Australia–Indonesia DTA [1992] ATS 40, Article 6; ATO, Rental properties and travel expenses; ITAA 1997, section 26-31

The foreign income tax offset, and where it runs out

The foreign income tax offset (FITO) gives you credit for the Indonesian 20%. If your total foreign tax is 1,000 in Australian currency or less, about Rp 12.6 million at Bank Indonesia's September 24, 2026 rate, you simply claim what you paid. Above that, you work out an offset limit: your Australian tax, Medicare levy included, minus the tax you'd pay with the foreign income and its deductions left out.

Here's where villa owners get caught. Indonesia taxes gross rent and Australia taxes net rent after interest and depreciation, so the Indonesian bill can exceed the limit. The excess is lost. There's no carry-forward and no refund, which is why a leveraged Bali villa can carry more tax than the same numbers in Australia would suggest.

Source: ATO, Guide to foreign income tax offset rules 2025; ATO, When a FITO applies, 2024; Bank Indonesia, kurs transaksi, September 24, 2026; our illustration

Capital gains tax when you sell, and the 2027 change

A resident who holds the villa for more than 12 months gets the 50% CGT discount on gains made up to June 30, 2027. The 2026–27 Budget of May 12, 2026 replaces that discount from July 1, 2027 with indexation of the cost base and a 30% minimum tax on net gains, and gains are split either side of that date. The first bill passed the Senate on June 25, 2026.

Currency counts in the gain. Each part of the cost base is converted at the rate on the day you paid it and the sale price at the rate on the day of sale, so a falling rupiah eats into an Australian-currency gain. The main residence exemption can cover a home abroad, but only while you're an Australian resident. Foreign residents lost it for sales after June 30, 2020.

Indonesia also takes 2.5% of the price on a titled sale, a final tax under PP 34/2016, and that amount goes into your offset. Our guide to selling a Bali villa covers the Indonesian costs of an exit.

Source: Budget 2026–27, Tax reform; Baker McKenzie, Major changes to CGT and negative gearing, July 1, 2026; BDO, June 5, 2026; ATO, Cost base of assets; ATO, Main residence exemption for foreign residents; PP 34/2016

Moving money between Australia and Bali

There's no Australian limit on sending money abroad for a purchase. Your bank reports every international transfer to AUSTRAC, whatever the size, and that's routine rather than a red flag. Carrying 10,000 in Australian currency or more in cash, about Rp 126 million, has to be declared when you leave.

Indonesia wants the money in rupiah. Its currency law, Law 7/2011, makes rupiah compulsory for transactions in the country, so you wire each installment to the local account your contract gives. Rent can come home without restriction. Keep every PPh 26 withholding slip, since the ATO can ask for proof of foreign tax. For fees and timing, see how to transfer money to Indonesia.

Through a PT PMA, or staying longer

A PT PMA pays 22% Indonesian corporate tax on profit, and dividends to an Australian shareholder then carry 15% withholding under the tax agreement, with interest at 10%. The structure makes sense for a licensed rental business, less so for one villa. Our PT PMA guide sets out the costs.

Australians can buy the 30-day visa at the airport or online beforehand for Rp 500,000 and extend it once, and Bali adds its own Rp 150,000 tourist levy. Spend more than half a year there, 183 days in any 12 months, and you may become an Indonesian tax resident, a line our tax residency guide explains in full.

Picking an area you already know

Many Australian buyers start where they surf or holiday: Uluwatu, Canggu, Pererenan. Those are also the areas with the most nightly rental demand, which suits a villa that has to pay its own way. See how each one compares in our area guides, then sort the catalog by lease length and net yield. We model 6–10% net a year on a well-run villa, before Australian tax.