Indonesia Rental Income Tax Guide

the Indonesia rental income taxation for 2026. The guide covers: the rental income subject to the IIT (PPh) at the progressive rates of 5-35% for the individuals; the final PPh 10% — the option to pay the final income tax on the rental income instead of the progressive rates; the withholding PPh 4(2) at 10% on the rent paid to the residents; the 20% WHT for the non-resident landlords; and the land and building tax (PBB) at 0.5% of the NJKP (Nilai Jual Kena Pajak — the Taxable Sale Value).

Rental Income — IIT Progressive 5-35% (Individuals)

Standard treatment — progressive rates: The rental income (the "penghasilan dari sewa" — the "rental income") derived by the individual is generally subject to the progressive personal income tax rates under the PPh Pasal 21 (for the employees) or the PPh 29 (for the individual taxpayers with the business income). The progressive rates for 2026: (a) 0 to IDR 60 million — 5%, (b) IDR 60 to IDR 250 million — 15%, (c) IDR 250 to IDR 500 million — 25%, (d) IDR 500 to IDR 5 billion — 30%, (e) above IDR 5 billion — 35%.
PTKP (Penghasilan Tidak Kena Pajak — the Non-Taxable Income threshold): The individual taxpayer is entitled to the PTKP deduction before the progressive rates apply. The PTKP for 2026: IDR 54 million for the taxpayer, IDR 4.5 million for the spouse (if the income is combined), and IDR 4.5 million per dependent (maximum 3 dependents).
Reporting: The rental income must be reported in the annual SPT Tahunan (Form 1770 for the individual with the business/rental income).

Final PPh 10% — Optional Regime

Final PPh 10% option: The individual taxpayer may elect to pay the final income tax (PPh Final) at the rate of 10% of the gross rental income instead of the progressive rates. The election is available under the PP No. 34/2017 (the "Peraturan Pemerintah No. 34 Tahun 2017 tentang Pajak Penghasilan atas Penghasilan dari Persewaan Tanah dan/atau Bangunan" — the "Government Regulation on the Income Tax on the Rental Income from the Land and/or Buildings").
Eligibility: The final PPh 10% applies to the rental income from the land and/or the buildings rented to the tenant who is the PPh 4(2) withholding agent. The option is available for both the individuals and the entities.
Irrevocable election: The election to use the final PPh 10% is irrevocable for the particular tax year. The taxpayer must notify the DJP of the election through the annual SPT.

Withholding PPh 4(2) — 10% on Rent Paid to Residents

Withholding obligation — PPh 4(2): The tenant (the "penyewa" — the "lessee") who is the PKP (the VAT entrepreneur) or the government institution must withhold the PPh 4(2) at 10% of the gross rental payment and remit it to the DJP. The withholding applies to the rent paid to the resident landlord (the individual or the entity).
Final tax: The PPh 4(2) withheld is the final tax — the landlord does not need to report the rental income in the annual SPT (for the final tax regime). The tenant issues the withholding certificate (the "bukti potong PPh 4(2)").
Scope: The PPh 4(2) 10% applies to the rental of the land and/or the buildings — the residential, the commercial, the industrial, and the other real estate properties. The lease of the movable property (the equipment, the vehicles) is subject to the PPh 23 at 2% (not the PPh 4(2)).

20% WHT for Non-Resident Landlords

Non-resident landlord — PPh 26 at 20%: If the landlord is the non-resident (the individual or the entity), the rent is subject to the withholding tax (PPh 26) at 20% of the gross rental amount. The tenant must withhold the PPh 26 and remit it to the DJP.
DTA reduction: The non-resident may claim the reduced rate under the applicable DTA. The typical DTA rate for the rental income is 10-15%.

Land and Building Tax — PBB (Pajak Bumi dan Bangunan)

PBB — the property tax: The PBB (Pajak Bumi dan Bangunan — the Land and Building Tax) is the annual property tax imposed on the ownership, the control, and/or the utilisation of the land and/or the buildings. The PBB is calculated at the rate of 0.5% of the NJKP (Nilai Jual Kena Pajak — the Taxable Sale Value).
NJKP calculation: The NJKP is the percentage (typically 20% to 40%) of the NJOP (Nilai Jual Objek Pajak — the Taxable Object Value). The NJOP is determined by the local government based on the property's market value (updated periodically). The PBB = 0.5% × NJKP = 0.5% × (20-40% × NJOP).
Who pays: The PBB is the obligation of the property owner (the lessor). The lease agreement may provide for the reimbursement of the PBB by the tenant, but the tax liability remains with the owner.
Exemption: The PBB is not imposed on the properties with the NJOP below IDR 12 million (the "rumah sederhana" — the "simple housing" exemption).