Selling Up, now what?

[PERtoDPS]

Exactly my point. The location my house is in now is much sought after. Maybe not as much as Canggu but demand in this area should be high and the housing supply is quite low. Hence, my house should at least have people visiting it on a weekly basis but there's no one. Thats why my logic comes from. Real estate market is fucked right now.

I was measuring by how low the rent my mrs paid this time is (indo), given when I got here in Nov, in my opinion was even less bule here than

Strangely we've had lots of interest just recently from Javanese and Singaporeans, hearsay is that the Ozzies are chomping at the bit too along with foreigners from Europe and the Americas.

Story line is that the lockdown has scared the shit out of many who thought they'd always be able to feck off in dire times to somewhere else easily. And Bali has had (comparatively) a good pandemic with few dead and not too serious of a quarantine/lockdown. No one thinks this is the last pandemic either...

You have to understand the Australians need an exemption to get out of Australia and then it's very expensive and difficult to get back. I can be in Germany in a week for 5 million and Perth which is a stones through from Bali approaching $4000 now. I have friends with mrs in Bali who haven't seen since March 2020, if you have a job or anything tying you to Australia you're literally flying to the unknown if you can get back or not.

 

[sakumabali]

Not sure I understand this: you mean the notari will accept the sales money into his escrow account and then make payments to my account (on the certificate as creditor to the "loan" ) although the original certificate is in my nominee's AND my name? Any considerations with money laundering problems with my banks. Maybe if I warned them first that the dosh was coming and why?

I always looked for a Notaris who seems to work for ME. And yes (my last sale of a leasehold plot is 5 years ago) I never had problems at a notary's office. I had plenty of problems with nominees & co-owners. Once your nominee & you have a deal it should all be good. As Mark said, you have to pay your share of taxes at the office

 

[Mark]

Not sure I understand this: you mean the notari will accept the sales money into his escrow account and then make payments to my account (on the certificate as creditor to the "loan" ) although the original certificate is in my nominee's AND my name? Any considerations with money laundering problems with my banks. Maybe if I warned them first that the dosh was coming and why?

The notaris is the 'clearing agent' for the transaction. In general, the seller deposits the certificate with the notaris. Upon receipt of the cash from the buyer (purchase price plus notaris fee plus buyer tax of 5%), the notaris disperses it according to the purchase and sale ageement and instructions given by the seller and processes the name change on the certificate. 2.5% is deducted from the proceeds for the seller's tax. All taxes are paid by the notaris to the government directly.

In your case I could see potentially two separate agreements. One is an 'official' basic purchase and sale agreement between your nominee and the buyer, which will be used for payment of government taxes and changing the name on the certificate from the nominee to the buyer. There may also be a second agreement which is the more detailed contract between you, the nominee and the seller wherein the mechanics of the sale and loan repayment are specified, and the flow of funds detailed. Definitely consult a notaris though. Information here is guaranteed to a value equivalent to its price, lol..

In terms of anti-money laundering, your bank should be fine with advance notice and perhaps a copy of the loan agreement and/or property purchase and sale agreement if they ask for it.

 

[Mark]

A few other thoughts based on Markit's questions in post #14 above:

1. For leases, the owner has to pay a 10% tax on the total lease price. The lessee doesn't have a direct tax obligation, so if the lessee is a foreigner, there is no issue of not having a tax number. Given that only locals can own land, they should have an NPWP (tax number). In practice, the tax is sometimes indirectly paid by the lessee, in the form of a slightly higher rental price.

2. Taxes are legally based on the actual transaction price or the government assessed price (called NJOP), whichever is higher. Many transactions are 'officially' reported at prices below the agreed sale price, provided it is still at or above NJOP. However, in some parts of Indonesia the NJOP is occasionally higher than current transacted prices, so the parties need to file an appeal, which as you can imagine is not a walk in the park to prevail on. In any case, the tax office is more on top of things these days, so one needs to be a bit careful not to report a ridiculously low price, even if above the NJOP. A friendly notaris may make a helpful suggestion on this issue.

3. Notaris fees are always based on actual transacted price paid. Fees can be negotiable, but the more complicated the transaction the less negotiating power one typically has. Anyway, the fee is typically paid by the buyer.

4. Regarding choosing a notaris, maybe have a short list of two or three that you find acceptable (and are reasonably well known) and suggest to the buyer to choose one of them?

 

[sakumabali]

However, in some parts of Indonesia the NJOP is occasionally higher than current transacted prices

I remember one time I wanted to be super smart and insisted on NJOP. Didn't even check the offer from the notary. Well she smiled (not a nice smile) and said "Ok if you wish". I had to pay much more

 

[cheynewalk]

So how does a person married/getting married to an indonesian guarantee their continued use of the house? Can the house be put in the indonesian spouses name and immediately be leased back to the bule partner at peppercorn rent for say 25 years? In this scenario the bule is protected by the lease agreement in the event his indonesian partner passes away and the local family cannot get their hands on the property.

 

[sakumabali]

So how does a person married/getting married to an indonesian guarantee their continued use of the house? Can the house be put in the indonesian spouses name and immediately be leased back to the bule partner at peppercorn rent for say 25 years? In this scenario the bule is protected by the lease agreement in the event his indonesian partner passes away and the local family cannot get their hands on the property.

yes - that's a good way. put in the WNI name and get yourself a hak sewa lease (2 x 25 years, depends how old you are )

 

[Mark]

So how does a person married/getting married to an indonesian guarantee their continued use of the house? Can the house be put in the indonesian spouses name and immediately be leased back to the bule partner at peppercorn rent for say 25 years? In this scenario the bule is protected by the lease agreement in the event his indonesian partner passes away and the local family cannot get their hands on the property.

First, under Indonesian law a foreign spouse of an Indonesian will inherit the property if the WNI passes away, so long as there was no will giving the property to the foreign spouse (bizarre outcome, but I have seen the legislation). The catch of the inheritance is that the foreign spouse has to dispose of the property within one year, or it becomes property of the Indonesian state. One possibility might be for the surviving foreign spouse to convert the property to a hak pakai title (which resident foreigners can hold, sort of a long term lease where the state is the ultimate owner), the upside of which is the possibility to re-convert to hak milik (freehold) and therefore sell on at a later date to an Indonesian citizen at full value. The downside is that there are restrictions on size (I believe 20 are is the maximum land size for hak pakai) and also conversion fees. See a notaris for the full details on conversion of land to hak pakai.

Second, the lease idea is interesting, although the tax authorities may have something to say about a 'peppercorn' rent, since they expect 10% of the value of the lease from the lessor in lieu of income tax. So there is risk of a sham transaction in which tax will be imputed on whatever the tax office thinks that the lease is worth. And say what you will about the authorities in this country, the people are working in the tax office are generally in the top tier intelligence wise, such as it is. No different from anywhere else I suppose.

I'd recommend discussing the issue with a good notaris (or perhaps a lawyer) to see what can be done. No doubt they would recommend a solution with the greatest protection and least risk to all parties.

 

[Markit]

the upside of which is the possibility to re-convert to hak milik (freehold) and therefore sell on at a later date to an Indonesian citizen at full value. The downside is that there are restrictions on size (I believe 20 are is the maximum land size for hak pakai) and also conversion fees. See a notaris for the full details on conversion of land to hak pakai.

A guy I know got caught by the immi trying to do Airbnb with his nominee freehold and they only agreed not to deport if he converted it to H. Pakia. Which he then did. Neither of us were aware that it's possible to reconvert back to H. Milik again? Can you expand on this? The property now effectively belongs to the Indo Gov...

 

[Mark]

A guy I know got caught by the immi trying to do Airbnb with his nominee freehold and they only agreed not to deport if he converted it to H. Pakia. Which he then did. Neither of us were aware that it's possible to reconvert back to H. Milik again? Can you expand on this? The property now effectively belongs to the Indo Gov...

I haven't done a hak pakai transaction myself, but I know someone who has. From what I understand, hak pakai is a property title that resident foreigners can hold. In English, it means 'right to use'. It is somewhat like a long term lease (with the legal owner being the Indonesian state), however unlike a lease it can be converted back to hak milik if later sold on/transferred to an Indonesian citizen. Thus the property retains the economic value of a hak milik property, instead of the suffering the annual depreciation that occurs with a leasehold. I believe that with extensions the maximum period for hak pakai is something like 80 years. The downsides include a limit on size (20 are), and taxes. My understanding is that upon conversion to hak pakai for property in Bali, one has to pay the government tax as if the property had been sold for at least Rp. 5.000.000.000, even if it was less expensive. Thus, the 'buyer' would have to pay a minimum of Rp. 250.000.000 in tax to do the conversion (5%). Also, the property is not supposed to be used for business, so I'm not sure how the guy you referenced would be able to continue to Airbnb the property legally?

 

[Markit]

Also, the property is not supposed to be used for business, so I'm not sure how the guy you referenced would be able to continue to Airbnb the property legally?

He didn't but because they caught him it was change to H Pakai or get deported... end of that business idea!