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Urgent! Paying Tax on Sale of Property

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  • Urgent! Paying Tax on Sale of Property

    We're in the process of selling a property and agreed a price with a buyer recently. A few days later she suggested that we tell the notary that the price being paid was much lower than the real price in order to save on notary fees and the whopping 5% tax that both buyers and sellers must. pay.

    I genuinely believed that provided the price was above the NJOP (the value of the land for tax purposes) this was legal so I agreed.

    Now I learn that this is not true and that you must declare the higher of the two prices (the real price or the NJOP price) to the notary and the tax office.

    Now, of course, the buyer is upset because it means she will have to pay about another Rp25 million in tax and she is threatening to withdraw. Payment and the signing of all the agreements is due to happen tomorrow.

    I want to be honest and pay tax on the true figure but don't want to lose my buyer. (It's not an easy property to sell).

    If I declare a low price to the tax office, that will leave me having to hide hundreds of millions of rupiah.

    However, I'm an employee not a businessman, so it's not easy to explain the presence of a lot of money all of a sudden in my account if I ever get checked by the tax office. (they sent me a letter last year about a mere Rp 13 million!!) Plus I worry that if the buyer likes to flaunt the rules , and gets investigated by the tax office a trail will lead from her to me.

    I know the Indo tax office is probably not as smart as I'm thinking, but I like to sleep at night.

    So that's why I'm turning to the forum. I reckon there must be a few wordly types here who might know 'ways' to do things
    PMs welcome
    Last edited by Eight Ace; 03-03-11, 13:56. Reason: correction

  • #2
    I believe, at least in Jakarta, the 5% transfer taxes (SSP for the buyer) are computed as a function of the NJOP value. Seems logical because to do otherwise would open the process to massive and constant abuse, just of the sort suggested by your buyer. Sounds to me like it might simply be a ploy to get you to pay the buyer's tax or at least part of it. Keep in mind that there is no sanctity of contract here; the price is subject to negotiations up until the money changes hands, regardless of what's in writing.

    Notary fees and commissions, if any, are also subject to negotiation. There are some rules of thumb, but they are often completely ignored in the process of negotiating terms. If the buyer, or you for that matter, think the notary fees is excessive then ask for a lower price and be prepared to walk if you are not satisfied. Notaries are like Angkat, they are everywhere and unscrupulous for the most part.

    Good luck.
    Last edited by waarmstrong; 03-03-11, 14:37.

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    • #3
      Not sure if this will help but I bought a house several years ago and did just this and stated that the sale price was well below the asking price. It is quite common thing to be done but at the end of the day if you are not happy pay the real price because if you have a buyer for a difficult prperty it may well be best to take the hit and that way you can sleep at night.
      Regards

      Jimbo

      Comment


      • #4
        hard choice, but here they do like u said above to under reporting amount of the tax, if i were i will agree to deal with for better 1 million for the government, than nothing i thought

        Comment


        • #5
          I would like to share what I know with regards to the property tax, anyone is welcome to correct me if I am wrong.

          NJOP (Nilai Jual Objek Pajak) is assessed value, you need to calculate NJOP per sqm of the land and NJOP per sqm of the construction.

          Both seller and buyer need to pay tax. The seller's tax is called Pajak Penjualan Tanah and the buyer's tax is called BPHTB (Bea Perolehan Hak Atas Tanah dan Bangunan).

          PPh: 5% x NJOP or Selling Price (whichever higher)
          BPHTB: 5% x (NJOP or Selling Price-NJOPTKP); NJOPTKP (Nilai Jual Objek Pajak Tidak Kena Pajak) is NJOP limit for land and building that are not subject to tax. It depends on the area, in Jakarta is Rp 60.000.000,-

          On top of that, seller needs to pay PPn which is taken from the buyer.
          PPN (Pajak Pertambahan Nilai): 10% x NJOP or Selling Price

          And there is also notary fee usually around 0.5%-1% of the selling price. Some people go to their camat to do their AJB (AKta Jual Beli/Sell Agreement) instead of notary. I heard that it's cheaper that way although I still need to do further research about it. Regarding the selling price, I know most people declared the sell price lower than actual price (just a little bit above NJOP or equal NJOP) so that it would give more benefit for both seller and buyer.

          When you own a property you also have to pay PBB (Pajak Bumi dan Bangunan)
          If the property value is less than Rp 1.000.000.000,-
          0.5% x 20% x (NJOP-NJOPTKP)
          If the property value is equal or more than Rp 1.000.000.000,-
          0.5% x 40% x (NJOP-NJOPTKP)

          But I would recommend you to do the proper and honest way.
          Last edited by nickie; 05-03-11, 21:14.
          [COLOR="navy"]Leave the gun, take the cannoli[/COLOR] - The Godfather

          Comment


          • #6
            hi nickie
            nice to join here

            and i would like to give clearly tax of selling the property for the seller is not PPh (Personal Income tax), but it is called Pajak Penjualan Tanah, it is a final tax for personal, but could be tax credit for the company.
            and for the buyer, yes its called BPHTB

            and there will be no PPN if it is second home, although u buy it from the develpment direclty (new estate)

            Comment


            • #7
              Fixed! Thank you Meili
              [COLOR="navy"]Leave the gun, take the cannoli[/COLOR] - The Godfather

              Comment


              • #8
                u're welcome

                Comment


                • #9
                  Originally posted by nickie View Post
                  I would like to share what I know with regards to the property tax, anyone is welcome to correct me if I am wrong.

                  NJOP (Nilai Jual Objek Pajak) is assessed value, you need to calculate NJOP per sqm of the land and NJOP per sqm of the construction.

                  Both seller and buyer need to pay tax. The seller's tax is called Pajak Penjualan Tanah and the buyer's tax is called BPHTB (Bea Perolehan Hak Atas Tanah dan Bangunan).

                  PPh: 5% x NJOP or Selling Price (whichever higher)
                  BPHTB: 5% x (NJOP or Selling Price-NJOPTKP); NJOPTKP (Nilai Jual Objek Pajak Tidak Kena Pajak) is NJOP limit for land and building that are not subject to tax. It depends on the area, in Jakarta is Rp 60.000.000,-

                  On top of that, seller needs to pay PPn which is taken from the buyer.
                  PPN (Pajak Pertambahan Nilai): 10% x NJOP or Selling Price

                  And there is also notary fee usually around 0.5%-1% of the selling price. Some people go to their camat to do their AJB (AKta Jual Beli/Sell Agreement) instead of notary. I heard that it's cheaper that way although I still need to do further research about it. Regarding the selling price, I know most people declared the sell price lower than actual price (just a little bit above NJOP or equal NJOP) so that it would give more benefit for both seller and buyer.

                  When you own a property you also have to pay PBB (Pajak Bumi dan Bangunan)
                  If the property value is less than Rp 1.000.000.000,-
                  0.5% x 20% x (NJOP-NJOPTKP)
                  If the property value is equal or more than Rp 1.000.000.000,-
                  0.5% x 40% x (NJOP-NJOPTKP)

                  But I would recommend you to do the proper and honest way.
                  The NJOP is not calculated by the property owner, but by the government and provided as part of the annual property tax bill -- the PBB. If you are going to use a value greater that the NJOP to compute the SSB and SSP, I suppose there could be some calculations to break down that value between the land and improvements. But as noted again below, the NJOP in the transactions I am familiar with was always the basis for the transfer tax calculations.

                  The buyer's transfer tax obligation is the Surat Setoran Bea Perolehan Hak Atas Tanah Dan Bangunan or SSB for short; the seller's tax is calls the SSP, Surat Setoran Pajak. Both are calculated as noted by Nickie, as far as I know. In the several property sales I have knowledge of, these taxes were always calculated from the NJOP as a matter of routine by the notary. Not withstanding the law, the actual sale price was never even discussed during the tax calculating phase of the deal.

                  The payment of a PPn is a new one for me. None of the buyers, in the transactions I have knowledge of, were asked by the seller to pay an additional 10% to the seller or to anyone else, for that matter, as part of the sales transaction. I would like to hear more about this assessment. Is PPN (Pajak Pertambahan Nilai) assessed nationally, regionally, uniformly, or what? Is it an income tax, a property transfer tax, or something completely different?

                  Comment


                  • #10
                    hi waarmstrong, i am try best to explain these tax here

                    if we bought the new property that the seller is the developer (PKP) , then we (as buyer) should pay the PPn (because it has produced an unvaluable things to be an added value things (land become building).

                    for the second used home/ property, the buyer shouldn't pay the PPn anymore, Because the seller is not PKP (they use the property as their consumed needs only)

                    PPn here is nationally tax (PAJAK PUSAT) same with (VAT) abroad

                    Comment


                    • #11
                      Buying new stuff is anathema to me, especially from developers, which would explain why I never ran across the PPN. I guess I understand that the its some sort of valued added tax on new construction that the developer passes on to the buyer. I would assume it is embedded in the price of the new house, but maybe not. Its one of those "Oh by the way," things that get sprung at deal signing, I can imagine the surprise makes more than a few deals go south.

                      Comment


                      • #12
                        I sold my house in Bogor years ago and the selling price was above the NJOP, but we only pay the tax base on the value of NJOP and every area has different value....in my area NJOP for 1 M2 land ( according to my PBB) 2009 is Rp. 1.032.000 and 2010 is Rp 1.147.000
                        We had agreement that the final price will included these taxes.....to find out the real value of your house/land, you can check the PBB receipt for your kantor kelurahan.
                        But when you buying a new house from developer, the tax BPHTB 5% is base on the NJOP from the developer...once you pay the 5% tax..Certificate/Akte will be yours..if you haven't pay it, you will not get the Certificate...
                        For Buying 2nd hand house, the tax is base on NJOP ( normally already included on the price and the seller will pay/setor tax on behalf of you).
                        So,when you buy a house/apartment, make sure the seller can show you the Certificate and PBB receipt from previous years..otherwise you'll get charged when you prossesing Pendafataran Peralihan Hak/balik nama on the Certificate.

                        Sorry I can't really explain the full detail here,..its all base on my experiences...further details please better ask Notaris.
                        Regards STT.
                        PS: If typo, blame it on Apple and Samsung!

                        Comment


                        • #13
                          ssst cibubur its hard if we talked abt new apartment, because their PBB is as united one in the same roof we called it PBB induk, and the developer will take care of the Pemecahan PBB it later on for many years later...

                          Comment


                          • #14
                            PPh: 5% x NJOP or Selling Price (whichever higher)
                            BPHTB: 5% x (NJOP or Selling Price-NJOPTKP); NJOPTKP (Nilai Jual Objek Pajak Tidak Kena Pajak) is NJOP limit for land and building that are not subject to tax. It depends on the area, in Jakarta is Rp 60.000.000,-

                            On top of that, seller needs to pay PPn which is taken from the buyer.
                            PPN (Pajak Pertambahan Nilai): 10% x NJOP or Selling Price

                            Can anyone explain the PPN requirement a little more?
                            I am currently interested in buying a hotel in West Java and this 'extra' 10% makes a big difference on calculating if i will be able to buy it..especially if all 3 taxes are based on the actual selling price..
                            would buying it through a PT formation help?
                            Would having my Indonesian wife's mother as the official 'purchaser' negate this PPN tax under the 2nd home rule (i know its a business not a second home, but are there similar extensions to the rule that can cover this?), my wife does not currently own any property in Indonesia.
                            Why do i not see this PPN on transactions that friends have executed when buying their property?
                            any clarification would be really helpful,
                            thanks,
                            Kevin.

                            Comment


                            • #15
                              Sorry Kevin, when I mentioned that the seller needs to pay for PPN 10%, I was talking about buying a brand new property straight from a developer. Usually the price that you pay when buying a property is including 10% PPN, which has to be paid by the developer as a seller. But if you buy a not brand new house (doesn't matter whether it's a second hand or a third hand house), obviously you buy it from a person, not a developer, means the taxes involved are only the seller tax (for a seller), the BPHTB (for the buyer) and the notary fee.

                              Note: PPN also needs to be paid by someone that build his own house (not for business purpose) if the building size is more than 400 sqm. How to calculate this is 10% x40% how much he spent to build the house.

                              I'll give you an example:

                              A is a developer, B is someone who wants to build his own house and might sell it again after, C is a buyer. A spent 2000 dollars to build a house (bare in mind, this cost also includes the PPN of the material he used to build it -this is called PPN masukan), B also spent the 2000 dollars including PPN for the material etc. Both buildings are no more than 400 sqm.

                              If A wants to sell it to C, taxes involved are:
                              Seller tax for A
                              buyer tax for C
                              And also A needs to pay PPN 10% x selling price (this is taken from the buyer). This PPN is called PPN keluaran.
                              So if A wants to get 1000 dollars profit (seller tax is not included) , he needs to sell the house for 3300 dollars to C. 300 is taken for the PPN.

                              If B wants to sell it to C, taxes involved are:
                              Seller tax for B
                              Buyer tax for C
                              And because B doesn't need to pay for the PPN taken from the buyer, means if he wants to get 1000 dollars profit, he needs to sell it for 3000 dollars only.

                              But the things is, because A is considered PKP (Pengusaha Kena Pajak) because he is a developer, he can claim the PPN masukan he spent for the building material etc back.

                              Thats what I know dorm the info I gathered around, hope it helps.
                              Last edited by nickie; 14-03-11, 14:58.
                              [COLOR="navy"]Leave the gun, take the cannoli[/COLOR] - The Godfather

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