At the start of 2026, Indonesia has quietly reintroduced a familiar fiscal instrument into the residential property market. Through Minister of Finance Regulation No. 90 of 2025, the government has reinstated a value-added tax incentive for the purchase of new landed houses and apartment units, with VAT on a portion of the purchase price borne by the state throughout the year.

The policy applies from January to December 2026 and exempts buyers from paying VAT on property values of up to Rp2 billion. While modest in scale, the incentive reflects a continued effort to stabilise household consumption and sustain momentum within the housing sector during a period of broader economic recalibration.

Rather than signalling a shift in direction, the regulation represents continuity a reaffirmation of tools the government has previously used to smooth market cycles rather than accelerate them.

How the Incentive Operates

Under the regulation, the VAT incentive applies to new residential properties that are ready for occupancy, encompassing both landed houses and apartment units. Eligible transactions must be completed within the 2026 tax year, either through a notarised deed of sale and purchase or a fully paid binding agreement executed before a notary.

The incentive is capped in two ways. First, it applies only to properties with a maximum selling price of Rp5 billion. Second, the VAT borne by the government is limited to the portion of the price up to Rp2 billion, with any remaining value subject to standard VAT treatment.

Properties that have previously received VAT exemptions are excluded, reinforcing the regulation’s focus on encouraging fresh transactions rather than repeated tax advantages.

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End-User Orientation

A notable feature of the policy is its individual limitation. Each buyer whether an Indonesian citizen or an eligible foreign national may utilise the incentive for one residential unit only. This structure subtly reinforces the policy’s orientation toward end-users rather than speculative accumulation.

By constraining multiple claims, the incentive supports purchasing activity without materially altering supply-demand dynamics or encouraging short-term price inflation. In effect, it lowers friction at the point of transaction without distorting the broader market.

Administrative Oversight

The regulation also places clear obligations on sellers classified as taxable entrepreneurs. These include issuing tax invoices, submitting periodic reports on the realisation of the VAT incentive, and formally registering property handover documentation.

While largely procedural, these requirements signal an emphasis on transparency and traceability ensuring the incentive remains a fiscal support mechanism rather than an accounting loophole.

A Measured Intervention

Seen in context, the reinstatement of the VAT incentive is less a stimulus than a stabiliser. It does not introduce new demand drivers, nor does it fundamentally reshape affordability. Instead, it reduces transaction costs at the margin, offering buyers greater certainty while allowing the market to adjust organically.

As in previous years, the impact of the policy will likely be uneven most noticeable in price-sensitive segments and among buyers already positioned to transact. Long-term outcomes will remain shaped by factors beyond fiscal policy alone: financing conditions, supply discipline, and confidence in the durability of place.

In this sense, the VAT incentive functions as a familiar tool, re-applied. Quiet, limited, and deliberate an intervention designed to support movement, not manufacture it.

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