Indonesia extends tax incentives for property buyers to spur sluggish market

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Indonesia Extends Tax Incentives For Property Buyers To Spur Sluggish Market

Indonesia introduced new tax incentives to stimulate the sluggish property market. In a first step, the government made it cheaper for buyers to own an expensive house or apartment by raising the luxury tax threshold limit.

The luxury levy of 20 per cent on bungalows or high-rise condos will now apply only to properties valued at 30 billion rupiah ($2.1 million) or more, according to the finance ministry. The levy previously applied to town houses with land title valued at 20 billion rupiah ($1.4 million) or more, as well as apartments, town houses and condos without land title and priced at 10 billion rupiah ($700,000) and above. Those regulations have now been merged.

Luxury properties above 30 billion rupiah account for about ten per cent of the domestic market, according to the Indonesia Real Estate Association.

Another incentive is the slashing of income tax on the sale of luxury properties. The tax on income from sales of luxury houses and condominiums priced at 30 billion rupiah or more was reduced to one per cent from five per cent, effective June 19. The threshold for the application of the lower tax was raised from ten billion rupiah previously.

As the mass-housing market makes up a large part of the industry, the government has also waived value-added tax up to a certain value for those properties in order to revive growth in the overall property sector which eased to 3.58 per cent last year from 3.68 per cent in 2017, according to data from Indonesia’s statistics bureau.

The series of tax incentives for housing shows the government is complementing earlier moves by Bank Indonesia to relax the loan-to-value ratio for home-buyers as the government of President Joko Widodo is seeking to stimulate the property sector in the hope of the industry’s multipliers effect on sub-sectors such as cement, ceramics, electronics and furniture helping overall economic growth.

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Indonesia introduced new tax incentives to stimulate the sluggish property market. In a first step, the government made it cheaper for buyers to own an expensive house or apartment by raising the luxury tax threshold limit. The luxury levy of 20 per cent on bungalows or high-rise condos will now apply only to properties valued at 30 billion rupiah ($2.1 million) or more, according to the finance ministry. The levy previously applied to town houses with land title valued at 20 billion rupiah ($1.4 million) or more, as well as apartments, town houses and condos without land title and priced...

Reading Time: 2 minutes

Indonesia Extends Tax Incentives For Property Buyers To Spur Sluggish Market

Indonesia introduced new tax incentives to stimulate the sluggish property market. In a first step, the government made it cheaper for buyers to own an expensive house or apartment by raising the luxury tax threshold limit.

The luxury levy of 20 per cent on bungalows or high-rise condos will now apply only to properties valued at 30 billion rupiah ($2.1 million) or more, according to the finance ministry. The levy previously applied to town houses with land title valued at 20 billion rupiah ($1.4 million) or more, as well as apartments, town houses and condos without land title and priced at 10 billion rupiah ($700,000) and above. Those regulations have now been merged.

Luxury properties above 30 billion rupiah account for about ten per cent of the domestic market, according to the Indonesia Real Estate Association.

Another incentive is the slashing of income tax on the sale of luxury properties. The tax on income from sales of luxury houses and condominiums priced at 30 billion rupiah or more was reduced to one per cent from five per cent, effective June 19. The threshold for the application of the lower tax was raised from ten billion rupiah previously.

As the mass-housing market makes up a large part of the industry, the government has also waived value-added tax up to a certain value for those properties in order to revive growth in the overall property sector which eased to 3.58 per cent last year from 3.68 per cent in 2017, according to data from Indonesia’s statistics bureau.

The series of tax incentives for housing shows the government is complementing earlier moves by Bank Indonesia to relax the loan-to-value ratio for home-buyers as the government of President Joko Widodo is seeking to stimulate the property sector in the hope of the industry’s multipliers effect on sub-sectors such as cement, ceramics, electronics and furniture helping overall economic growth.

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