New House Without VAT

During the Covid-19 outbreak, many young couples are getting married. While saving on catering costs because there is no need to invite many people on the grounds of preventing the transmission of Covid-19. So there is no need to also rent an expensive building to hold a wedding reception. At home is enough, the important thing is legal.

After the wedding ceremony is over, millennial couples prefer to live separately from their parents. Contract houses, flats, boarding houses, apartments are not a problem. Slowly repay the cost to buy your own landed house. Understandably, the price of a new house in Denpasar has now reached IDR 500 million per square meter, not to mention the tax.

If you look around, during the pandemic period in early 2020, people really just stay at home. Many houses are being sold at low prices. Not a new house developed by a developer, but a community residential house which is the only asset that can be sold when you need money. The house was sold at below market prices, because they were desperate for money.

We all know, the beginning of the pandemic was a dark period for almost everyone because incomes dropped dramatically while needs had to be met and installments had to be paid. With so many houses being sold below market prices, of course, the middle class will prefer used houses over new homes at market prices. Is this called unfair competition? In fact, I don’t think this can be said to be competitive.

Speaking of house taxes, if you just buy candy, you will be taxed, of course, big transactions like houses will also be taxed. However, do you know what taxes are imposed when buying a house?

There are two parties involved when a transaction takes place, namely the seller and the buyer. The seller is the party who delivers the goods, while the buyer is the party who receives the goods. If you investigate from each perspective, then the seller gets the income and the buyer gets the goods. Simply put, if there is income there will be Income Tax (PPh), if there is delivery of goods there will be Value Added Tax (VAT).

If a house sale and purchase transaction occurs, the seller will be subject to income tax of 2.5% of the selling value of the house. This figure is a discount from the original rate of 5%. In addition to PPh, there is also a tax imposed on sellers, namely the Rural and Urban Land Building Tax (PBB P2). However, the tax is a local tax.

For the buyer, the house acquired will be subject to VAT of 10% of the purchase price. In addition to VAT, buyers are also charged with Customs for the Acquisition of Rights on Land and/or Buildings (BPHTB), which is a local tax as well.

Free VAT

With the issuance of the Minister of Finance Regulation Number PMK-21/PMK.010/210, the Value Added Tax on the Delivery of Landed Houses and Residential Units of Flats Borne by the Government for Fiscal Year 2021, the government has officially borne VAT on the purchase of landed houses and residential flats.

Now the brides or brides-to-be who are already eyeing their dream new home can immediately step on the gas to buy it without worrying about VAT. The reason is, every purchase of a new house in the form of a landed house or apartment and is the first time it has never been transferred, the VAT will be borne by the government.

Previously, this incentive could be used for the tax period from March to August 2021. However, the government has extended this incentive so that it can be utilized until the tax period in December 2021 with the issuance of the Minister of Finance Regulation Number PMK-103/PMK.010/21 in lieu of PMK-21/PMK. .010/2021.

Of course, there are several requirements that must be met in order for this incentive to be utilized such as the house price regulation. Houses sold for up to IDR 2 billion will be covered by 100% VAT. Meanwhile, for houses with selling prices above Rp. 2 billion to Rp. 5 billion, 50% VAT will be borne.

What needs to be a concern for sellers of new housing with the status of a Taxable Entrepreneur (PKP) is that they must make a tax invoice and report on the realization of Government-borne VAT. Because if the conditions described in PMK-103/PMK.010/21 are not fully met, the Tax Service Office (KPP) has the right to collect VAT payable in accordance with the provisions of the legislation.

In addition, upon the handover of this new house, the Minutes of Handover (BAST) must be signed and register the BAST in the application system of the Ministry of Public Works and Public Housing. Also keep in mind, that the house that is sold is not transferable within one year from the date of delivery.

Support PEN

This tax incentive is given in order to support the National Economic Recovery (PEN) program. New home developers or sellers should not worry if they see unhealthy house price competition. The hope is that the housing construction sector business can develop even though the pandemic period is not over.

In addition, this incentive can be used as much as possible so that the enthusiasm of the middle class to buy new housing is higher because if you think about it, the Covid-19 pandemic has not had a significant impact on the income of the middle class.