Selling a villa in Bali: Everything you need to know

Selling a villa in Bali can be both exciting and challenging. Bali’s real estate market offers unique opportunities due to its global appeal and ever-growing tourism industry. However, navigating the complexities of property transactions in Indonesia requires a deep understanding of local regulations, market trends, and cultural nuances. This article delves into the essential steps, potential pitfalls, and expert tips to ensure a smooth and profitable transaction when selling a villa in Bali.

Can foreigners sell a villa in Bali?

Foreigners can tell a villa in Bali, although it’s essential to understand the regulations for property ownership and sales for non-Indonesians. As part of Indonesia, Bali follows the country’s property laws, which are specific about property ownership. However, besides following Indonesia’s real estate laws, Bali also has several local regulations that differ from national ones.

While foreigners can’t own freehold land, they can obtain other land titles such as Hak Guna Bangunan (HGB), Hak Pakai (HP), or Hak Sewa (HS). They can also establish a PT PMA (foreign-owned company) to hold the property. PT PMAs are also allowed to sell land or a villa in Bali. When selling, it’s crucial to ensure that all legalities are followed to ensure a smooth transaction.

Selling a villa in Bali in 7 steps

Do you want to sell your villa but don’t know where to start? Selling a villa in Bali can be done by following the seven steps below.

Step 1: Determine the property ownership title in Bali

Before selling a villa in Bali, you must understand the type of ownership title you hold. Foreigners can’t own property under Hak Milik (SHM) but can instead do so in one of the following ways:

• Hak Sewa: This title is used for leasehold property, usually valid for 25 or 30 years. Foreigners can sell the Hak Sewa title or sublease their property to someone else if the lease agreement allows them to sublease their property.
• Hak Pakai: Foreigners are allowed to buy property in their name under a Hak Pakai title, which is only applicable to specific properties in Bali. When selling a villa in Bali under Hak Pakai, the buyer needs to meet the criteria for HP.
• Hak Guna Bangunan: PT PMAs who are leasing land and have built a villa on top of the land own the structure under the Hak Guna Bangunan title. Selling the property with HGB title to another PT PMA is possible. Ensure that the land’s lease agreement is still valid.

Each type of property ownership has its criteria. It’s essential to ensure the buyer can buy your villa under the current land title.

Step 2: Get your Bali villa valued by an expert

Setting the right price is essential when selling a villa in Bali. The average price for Bali villas is IDR 14 million ($882) per square meter. However, for a more accurate valuation of your villa in Bali, consider your property’s current market trends, location, and condition. It’s also beneficial to compare with neighboring properties of similar size and style. A Bali property agency can help you with the valuation of your property.

Step 3: Choose a professional real estate agent

A knowledgeable real estate agent in Bali can guide you through the complexities of the local market, provide insights, and help ensure a successful sale. You can sell a villa in Bali for free if you decide to do it on your own, as working with an agent is not mandatory. However, a real estate agent can significantly ease the process of selling a villa in Bali and even get you a better price.

Step 4: Prepare your marketing materials

The online marketplaces are full of listings, making it hard for individual sellers to stand out. Effective marketing is critical to stand out and attract potential buyers. This includes high-quality photos, detailed property descriptions, and even virtual tours. Typically, real estate agents will take care of villa marketing in Bali.

Step 5: List your property on websites

Websites like Own Property Abroad, Dotproperty, Rumah, and Facebook marketplaces can help increase visibility. Many foreigners looking to buy a villa in Bali from abroad use property websites to view listings. If you’re working with a real estate agency, they’ll typically handle this.

Step 6: Have the paperwork ready

Ensure all necessary documents, including land titles and contracts, are in order. Potential buyers will ask for the documents as part of the due diligence process, so prepare all the paperwork before you start receiving potential buyers for home viewings. Having all documents in order will make it easier to close the deal when you find a buyer.

Step 7: Sign the deal

A notary should sign contracts after the terms are agreed upon to ensure legal validity. A notarized contract provides stronger evidence, making it harder for parties to withdraw. Once the agreement is signed, you’ve successfully sold your villa in Bali.

Selling a villa in Bali requirements for foreigners

There are several requirements for foreigners selling a villa in Bali. The most important requirement is having the correct land title, such as Hak Guna Bangunan, Hak Pakai, or Hak Sewa, and selling the villa only to foreigners or Indonesians eligible for this land title.

Before selling, ensure all necessary paperwork, including contracts and land titles, is prepared and verified. A notary must sign all contracts to ensure their legality. Both foreigners and Indonesians must pay property sales taxes, so ensure all taxes related to the sale are settled.

What are the costs of selling a villa in Bali?

There are several costs associated with selling a villa in Bali:

1. Real estate agent fees: Agents charge a commission or fee if you hire them. Most real estate agents in Bali charge a 2% commission on the sales transaction price.
2. Notary fees: Essential documents must be notarized, which incurs fees. These fees depend on the document type, location, and the notary office.
3. Taxes: This includes the Land Acquisition Tax, Corporate Income Tax, or Personal Income Tax, depending on the property’s ownership structure.
4. Marketing costs: If you’re promoting the property yourself, consider charges for listing on websites, advertisements, and other promotional materials.

Despite these costs, selling a villa in Bali can still make you a lot of money. According to statistics, the average property ROI in Bali falls between 12% and 20% per annum.

Taxes to pay when selling a villa in Bali

Indonesian nationals and foreigners must pay property sales taxes when selling a villa in Bali. It’s essential to pay your taxes in Indonesia to avoid problems. Several taxes may apply:

1. Land Acquisition Tax: The seller is responsible for this one-time tax, charged at a flat rate of 5% based on the transaction or assessed value (whichever is higher).
2. Corporate Income Tax: If a company, like a PT PMA, owns the property, it must pay this tax on income and capital gains from the sale at a fixed rate of 22%.
3. Personal Income Tax: Private property owners, especially foreigners staying in Indonesia for more than 183 days a year, must pay this tax on the income from the sale. The rates vary based on income, ranging from 5% to 35%.

Avoid these mistakes and pitfalls

Given the favorable market conditions, selling a villa in Bali can be very rewarding. However, to ensure a smooth and successful transaction, it’s essential to be aware of common mistakes and misconceptions:

1. Neglecting staging: Staging is preparing a property for sale by decluttering, adding furniture, and making it visually appealing. Staging can make a significant difference even if your villa is new and clutter-free. Ensure your Bali villa looks as it does in the promotional photos, and address any minor repairs to avoid giving buyers a negative impression.
2. Selling on your own: While the internet has made property listings more accessible, selling a villa in Bali without professional help can be challenging. The online marketplace is full of listings, making it hard for individual sellers to stand out. Real estate agents have the expertise, tools, and network to market your property effectively. They can also provide valuable advice on pricing and presentation. Avoid freelance agents who may lack the resources of a full-fledged agency.
3. Overpricing your villa: One of the most common reasons villas don’t sell is because their price is too high. While every seller wants to maximize their return, setting a price too far above the market rate can put off potential buyers. Considering the current market conditions and the property’s value, pricing your villa competitively is essential.

To ensure a successful villa sale in Bali, it’s crucial to be aware of these pitfalls and work with professionals who understand the Bali property market. By avoiding these common mistakes, you can enhance your chances of selling your villa quickly and at a favorable price.

Sell your villa in Bali with Own Property Abroad

Selling a villa in Bali can be both exciting and challenging. Own Property Abroad can assist you with selling a villa in Bali and ensure a seamless and hassle-free sale transaction. Thanks to our extensive knowledge and local experience in the Indonesian market, we can help with legal requirements, finding suitable buyers, negotiating the best deals, and conducting due diligence.

With our expert team, you won’t have to navigate the complexities of the Balinese property market alone. For further information on how we can assist you, kindly drop your details below or email us at [email protected]. Let’s start working on your property success story today!

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