Summary:
The Minister of Finance, Sri Mulyani Indrawati, has introduced a tax incentive for the delivery of houses and apartments under a certain price range through a government-funded value-added tax (VAT) incentive program. This initiative aims to stimulate Indonesia’s economic growth by boosting consumer purchasing power. The eligibility criteria for this incentive program include the price of the property not exceeding Rp 5 billion, the property being new and ready for occupancy, and specific requirements regarding registration and timing of transactions. The amount of the VAT incentive depends on the timing of the property delivery, with varying percentages of coverage based on the date of transfer.
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Incentivizing Affordable Housing: Sri Mulyani’s Tax Breaks for Homebuyers
In a bid to bolster Indonesia’s economic vitality and promote affordable housing options, Minister of Finance Sri Mulyani Indrawati has unveiled a tax incentive program aimed at easing the financial burden for homebuyers. Through this initiative, the government will cover the value-added tax (VAT) for the acquisition of houses and apartments with a price tag under Rp 5 billion. This move comes as part of a broader strategy to sustain economic growth by empowering consumers to invest in real estate and stimulate market activity.
The government’s commitment to supporting the housing sector is underscored by the extension of this VAT incentive, building upon similar programs introduced in 2023 and 2024. By offering tax relief on property transactions, policymakers seek to not only drive demand for housing but also enhance overall economic resilience amid prevailing challenges. The decision to extend the VAT incentive underscores the government’s dedication to fostering economic prosperity and social welfare through targeted fiscal measures.
Eligibility Criteria and Application Process
To qualify for the VAT incentive, properties must meet specific criteria outlined in Ministerial Regulation No. 13 of 2025. Firstly, the selling price of the house or apartment should not exceed Rp 5 billion, ensuring that the benefit reaches middle-income families and aspiring homeowners. Additionally, the property must be brand new and ready for occupancy, reflecting the government’s emphasis on quality and safety standards in the housing market.
Furthermore, properties eligible for the VAT incentive must possess a registered identification code issued by the relevant ministry and be the first unit transferred by the developer. This requirement aims to prevent abuse of the incentive scheme and ensure that genuine homebuyers benefit from the tax break. For individuals who have already made down payments or installment payments before the implementation of this regulation, the VAT incentive remains applicable provided that the initial payment occurs after January 1, 2025.
Impact and Future Prospects
The magnitude of the VAT incentive varies based on the timing of property transfer, with the government assuming 100% coverage for the VAT on properties delivered from January 1 to June 30, 2025, with a base taxable amount of Rp 2 billion. Subsequently, for property transfers occurring from July 1 to December 31, 2025, the VAT incentive covers 50% of the taxable amount of Rp 2 billion. This tiered approach incentivizes timely property transactions and encourages developers to expedite the delivery of housing units.
While the VAT incentive is limited to one individual for one housing unit, previous beneficiaries of similar incentives under earlier regulations can capitalize on the benefits of Ministerial Regulation No. 13 of 2025 for additional property purchases. However, individuals who cancel property transactions initiated before January 1, 2025, forfeit their eligibility for the VAT incentive on the same property, emphasizing the importance of commitment in real estate transactions.
As Indonesia navigates the complexities of economic recovery and social welfare enhancement, initiatives like the VAT incentive for affordable housing underscore the government’s proactive stance in supporting citizens’ aspirations for homeownership and economic stability. By fostering a conducive environment for property ownership and investment, policymakers aim to lay the groundwork for sustained growth and prosperity, benefiting both individual households and the broader economy.
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