The government’s plan to widen the tax base in 2027 could affect investor interest in rental properties. Extra taxes may cut into the returns investors earn from their assets.
This situation could push property owners to rethink their portfolios, even selling off rentals that no longer perform well. Bambang Ekajaya, Deputy Chairman of the Indonesian Real Estate Association (REI), said tax policies should reflect the current state of the property market.
Bambang explained, property investors differ from speculators; investors purchase assets to hold and rent out for sustainable income.
“If additional taxes are imposed, existing investors might well decide to offload their properties, ultimately causing those properties to stagnate,” Bambang told the media outlet *Kontan* on Sunday (August 9, 2026).
Rental Yields vs. Tax Burden
Right now, rental income from land and buildings is subject to a Final Income Tax of 10% on gross rental value. Bambang pointed out that rental yields usually range between 4% and 5% of a property’s value.
“If the tax is already 10% while returns are only 4–5%, investors won’t be interested,” he said.
He warned that heavier taxes could lead owners to offload less productive assets, reducing the supply of rental properties.
Bambang urged the government to focus on improving taxpayer compliance instead of adding new burdens. He also highlighted the need to distinguish between productive rental properties and speculative holdings.
REI advocates for tax rules that are fair, predictable, and supportive of long‑term investment. Policies, he said, must balance market realities with the sustainability of the property sector.
Sources: Kontan
