- Real Estate 3.0
- Posts
- How to Legally Save $30,000+ Buying Property in Bali
How to Legally Save $30,000+ Buying Property in Bali
Most foreigners investing in Bali make the same expensive mistake...They focus on the property—and forget the structure. But here’s the thing: **how you buy** matters more than "what you buy". Make the wrong move, and the Indonesian tax system will quietly take a huge bite out of your returns. The good news? There’s a legal, proven way to sidestep the worst taxes—and you don’t need to be a lawyer or local to use it.
Michael N
May 06, 2025
Real Example: The Villa That Makes (or Loses) You Money
Imagine you’re buying a 30-year leasehold villa for $200,000.
It brings in 15% gross rental yield ($30,000/year)
You rent it part-time, enjoy it part-time
After 5 years, you sell it
The market goes up—either by 12% (optimistic) or 5% (conservative)
Now here’s the twist:
How you buy this property could make or lose you over $30,000.
The Real Tax Trap (No One Warns You About)
Indonesia isn’t a tax haven.
Here’s what you’re up against:
Ownership Structure | Rental Income Tax | Capital Gains Tax |
|---|---|---|
Personal (foreigner) | 20% on rental | 20% on resale |
PT PMA (foreign-owned company) | 10% on rental | 10% on resale |
LLC Tax Shield (e.g. Wyoming) | 20% on rental | 0% on resale ✅ |
Yes, that’s right—buying through an LLC legally avoids capital gains tax entirely.
Why?
Because you’re not selling the lease in Indonesia—you’re selling the LLC that owns it, governed under U.S. law. Let’s break down what this means for your wallet.
Case A: If the Property Appreciates by 12%
Structure | Rental Net (5 yrs) | Sale Net | Total (Before Costs) | Final Net |
|---|---|---|---|---|
Personal Leasehold | $120,000 | $179,200 | $299,200 | $299,200 |
PT PMA | $135,000 | $201,600 | $336,600 | $322,900 |
LLC Tax Shield | $120,000 | $224,000 | $344,000 | $343,000 ✅ |
Case B: If the Property Only Appreciates 5%
Structure | Rental Net (5 yrs) | Sale Net | Total (Before Costs) | Final Net |
|---|---|---|---|---|
Personal Leasehold | $120,000 | $168,000 | $288,000 | $288,000 |
PT PMA | $135,000 | $189,000 | $324,000 | $310,300 |
LLC Tax Shield | $120,000 | $210,000 | $330,000 | $329,000 ✅ |
The Smart Move: Structure First, Property Second
Here’s what the math tells you:
Buying in your personal name as a foreigner?
You’ll lose up to $56,000 in taxes.
Setting up a PT PMA?
Better, but still expensive, complicated, and full of hidden fees.
Using an LLC to shield the lease?
👉 Lowest taxes, easiest resale, and legal protection built-in.
And here’s the best part:
The LLC model isn’t just smart—it’s completely legal and used by savvy investors globally.
Why the LLC Model Wins
0% capital gains tax
Own the lease without being exposed
Resell the LLC (not the lease) in days, not months
Low setup cost (~$300)
Ideal for estate planning and asset protection
If you’re investing in Bali and you’re not using an LLC, you’re probably leaving money on the table—and handing it to the taxman.
The villa isn’t the trap. The structure is.
Use the right one, and you win before the paperwork is even signed.
Want help setting up your LLC structure the smart way?