Land Purchase Process in Indonesia

Land Purchase Process in Indonesia

Buying land in Indonesia is a valuable long-term investment, whether for residential purposes, business purposes, or property investment. However, the land purchase process cannot be undertaken haphazardly. Legal procedures must be followed to ensure legal ownership and avoid disputes. The following are the main steps in the land purchase process in Indonesia:

1. Determine the Location and Check the Land Status

The first step is to select land that meets your needs, considering location, accessibility, and potential investment value. Next, ensure the land's status is clear and free of disputes. Buyers can request a land certificate from the seller to check at the National Land Agency (BPN) or through an online certificate checking service.

Some important things to check:

Whether the land has Freehold Title (Hak Milik), Building Use Rights (HGB), or Use Rights (Hak Pakai). Whether the land is free of disputes, mortgages, or debt guarantees. Compliance with the local Spatial Planning (RTRW).

2. Check the Seller's Legality

Ensure the seller is the legal owner of the land. If the land is inherited, all heirs must sign the sale and purchase agreement. For land owned by a legal entity or company, check the company deed and other supporting documents.

3. Initial Agreement and Down Payment

Before the Deed of Sale and Purchase (AJB) is drawn up, the buyer and seller typically enter into a notarized Sales and Purchase Agreement (PPJB). At this stage, the buyer also pays a down payment as a commitment.

4. Preparation of the Deed of Sale and Purchase (AJB) at the Land Deed Official (PPAT)

The legal land sale and purchase process takes place before a Land Deed Official (PPAT). The PPAT will verify the completeness of the documents, including:

Original land certificate

KTP and KK of the seller and buyer

NPWP (if required)

Proof of payment of Land and Building Tax (PBB)

Spousal agreement (if the seller/buyer is married)

Once all documents are complete, the PPAT will prepare the AJB, which will then be signed by both parties.

5. Tax Payment

Before the Deed of Sale and Purchase (AJB) is signed, there are certain tax obligations that must be fulfilled: The seller pays Final Income Tax (PPh) of 2.5% of the transaction value. The buyer pays BPHTB (Land and Building Acquisition Tax) of 5% of the transaction value after deducting the Non-Taxable Object Sales Value (NJOPTKP).

6. Transfer the Title to the Land Certificate at the National Land Agency (BPN).

After the Deed of Sale and Purchase (AJB) is finalized, the final step is to transfer the title to the land certificate at the BPN office. This process is carried out by the Land Deed Official (PPAT), who handles the transfer of title registration. The BPN will then issue a new certificate in the buyer's name.

7. Land Handover

Once the entire process is complete, the land officially becomes the buyer's property. The handover is usually accompanied by the submission of the original land certificate, proof of tax payment, and other supporting documents.

The process of purchasing land in Indonesia involves several legal steps, from verifying the land status, preparing the Deed of Sale and Purchase (AJB), paying taxes, and transferring the title to the certificate. To avoid future issues, buyers are strongly advised to use the services of a notary/PPAT (Private Land Office) and to check directly with the National Land Agency (BPN) before the transaction.