balivillacareDepreciating a villa for Indonesian tax: the rates, and when they matter
Key takeaways
- A building is depreciated over 20 years at 5% (permanent), 10 years at 10% (non-permanent), straight line only.
- Land is not depreciable — whatever the title, hak milik, HGB or hak pakai.
- Depreciation starts in the month of spending, or of completion for a villa still being built.
- It only reduces tax where the tax is on profit: the 22% corporate rate. The 0.5% turnover tax and the 10% final tax on a lease ignore it.
- On a villa building costing IDR 6 billion, IDR 300 million a year comes off taxable profit for 20 years.
A villa company's largest cost is the building, and Indonesian tax lets it be spread over the building's tax life. Under a tax on gross revenue the deduction is worth nothing; under the tax on profit it is worth a great deal. Which one a company is on decides whether this page matters to it.
Seven words on a depreciation schedule
The terms of Pasal 11 of the income tax law.
| Term | What it is | What it means for a villa |
|---|---|---|
| Penyusutan | Depreciation. | Spreads the building cost over its tax life. |
| Bangunan permanen | Permanent building. | 20 years, 5% a year. |
| Bangunan tidak permanen | Non-permanent building. | 10 years, 10% a year. |
| Harta bukan bangunan | Non-building assets. | Groups of 4, 8, 16 or 20 years. |
| Tanah | Land rights. | Not depreciable. |
| Garis lurus | Straight line. | The only method for buildings. |
| Saldo menurun | Declining balance. | Allowed for non-building assets. |
What the law sets
Buildings
UU PPh Pasal 11(6), as amended by UU No. 7 Tahun 2021: a permanent building over 20 years at 5% a year; a non-permanent building over 10 years at 10%. Buildings may only be depreciated in equal parts (Pasal 11(2) allows declining balance for every other asset). Since 2021, a permanent building with a longer life may be depreciated over its actual life as recorded in the books (Pasal 11(6a)).
Land
Depreciation covers spending on tangible assets that earn income over more than a year, except land held as hak milik, HGB, HGU or hak pakai (Pasal 11(1)). The plot is not depreciated; the building on it is. The land rights.
Everything else
Non-building assets fall into four groups: 4 years (25% straight or 50% declining), 8 years, 16 years and 20 years (Pasal 11(6)). Which group furniture, a pool pump or a vehicle belongs to is set by the finance minister's regulation, not read here.
When it starts
In the month of spending; for a villa under construction, in the month it is finished. With the Director General's approval, from the month it starts earning (Pasal 11(3)-(4)).
Running a villa company on the profit tax?
Tell us which part of Bali the villa is in. Five questions, and your details are the last step.
When it matters, and when it does not
| Does depreciation reduce it? | Why | |
|---|---|---|
| 0.5% of turnover (PP 55/2022) | No | Charged on gross turnover |
| 10% final tax on a lease | No | Charged on gross rent |
| 22% corporate income tax | Yes | Charged on taxable profit |
| Individual 5% to 35% bands | Yes, for business income on profit | Charged on taxable income |
A PT PMA within PP 55's three years gets no benefit from depreciation; one after them gets all of it. That is part of what a company is choosing when it decides between the two. A PT PMA's income tax.
One building, worked
An illustration of the arithmetic, not any villa's figures: a permanent villa building costing IDR 6,000,000,000, completed and let from January.
| Amount | Rule | |
|---|---|---|
| Building cost | IDR 6,000,000,000 | Excluding the land |
| Annual depreciation, 5% | IDR 300,000,000 | Pasal 11(6), 20 years |
| Tax saved at 22% a year | IDR 66,000,000 | Pasal 17(1)(b) |
| Tax saved at 11%, with Pasal 31E | IDR 33,000,000 | Pasal 31E, turnover up to IDR 4.8bn |
The same building, three ways
The category and the life chosen change the yearly deduction, not the total. Over its tax life the full IDR 6 billion comes off either way; what moves is how fast.
| Yearly deduction | Years | |
|---|---|---|
| Permanent, 20-year table | IDR 300,000,000 | 20 |
| Permanent, 30-year actual life (Pasal 11(6a)) | IDR 200,000,000 | 30 |
| Non-permanent, 10-year table | IDR 600,000,000 | 10 |
A faster deduction is worth more early, when a new villa company is also most likely to still be inside PP 55's three years — where it is worth nothing. The order in which the two regimes apply is part of the arithmetic.
On a sale
When the villa is sold, the remaining book value is charged as a loss and the sale price is booked as income in that year (Pasal 11(8)) — for a company on the profit tax. The seller's final 2.5% transfer tax is separate. The taxes on the way out.
What this page does not cover
- Which group each non-building asset falls in. Finance minister's regulation, not read.
- Whether a given building is permanent or not. A factual question for the books.
- Amortising a prepaid lease. Pasal 11A covers intangible and other long-life spending; how a lease premium is treated was not read.
Common questions
Can I depreciate a villa for tax in Indonesia?
A company taxed on its profit can: a permanent building over 20 years at 5% a year, a non-permanent one over 10 years at 10%, straight-line (UU PPh Pasal 11(6), as amended by UU 7/2021). The land is not depreciable.
Does depreciation help under the 0.5% tax?
No. PP 55/2022 charges 0.5% of turnover, and the 10% final tax on a lease is charged on the gross rent; neither deducts costs. Depreciation only reduces tax where the tax is on profit — the 22% corporate rate or the individual bands.
When does depreciation start?
In the month the money is spent; for a building under construction, in the month it is completed (Pasal 11(3)).
Can a villa be depreciated over more than 20 years?
Since 2021, a permanent building with a longer useful life may be depreciated over its actual life as recorded in the books (Pasal 11(6a)).
What about furniture and the pool?
Non-building assets fall into groups of 4, 8, 16 or 20 years. Which asset falls in which group is set by the finance minister's regulation, which was not read for this site.
Sources cited on this page
- UU No. 7 Tahun 2021 (HPP) — Pasal 11 as amended
- UU No. 36 Tahun 2008 — income tax law
- PP No. 55 Tahun 2022 — the 0.5% alternative
Every figure above links to the source it was read from. This page was last changed on 2 October 2026. How we check this.