- A Bali leasehold is inheritable, but what passes to the heirs is not the land — it is the lease contract itself (Hak Sewa), with its remaining term. This only works if the PPAT notarial deed contains an explicit inheritance clause naming the heirs; without it, the contract can end on the tenant's death.
- Indonesia has no separate inheritance tax, but on re-registering the right heirs pay BPHTB — a transfer duty of up to 5% of assessed value, plus PPh of 2.5% on any later sale. To keep heirs out of a drawn-out court process, you need an Indonesian notarial will registered in the Central Registry (Pusat Daftar Wasiat).
- For a foreign heir the form of ownership decides everything: a contractual Hak Sewa is inherited under the contract; Hak Pakai requires the heir to hold residency (KITAS/KITAP), otherwise the one-year rule to sell applies; PT PMA shares are inherited as personal property and side-step that limit.
A villa in Bali is bought for decades — a leasehold with a renewal horizon can outlast a whole lifetime. Yet almost no one, at the moment of signing, asks the question that will one day matter most to their family: what happens to this villa when the owner is gone? In Bali the answer is not simply "it passes to the children, like a flat back home." Here it is not the land that is inherited but a contractual right; three parallel systems of succession law apply at once; and a foreign heir can run into a one-year rule to sell the asset. Let us lay it out plainly: what exactly passes to the heirs, what has to be written in from the start, and what it costs in tax.
In short: how a Bali villa is inherited
The direct answer: a Bali leasehold is inheritable, but what passes to the heirs is not the land — it is the lease contract itself (Hak Sewa), with its remaining term. This works on one condition: the notarial deed that creates the leasehold must contain an explicit inheritance clause stating that the rights under the contract pass to the tenant's heirs without fresh negotiation with the landowner. Indonesia levies no separate inheritance tax, but on transferring the right the heir pays BPHTB — a transfer duty of up to 5% of the assessed value. And so that heirs are not left stranded in a foreign court in an unfamiliar language, an Indonesian notarial will should be drawn up in advance. Everything else in this article is the detail behind those four points.
What is actually inherited: a right, not the land
To understand the mechanics of inheritance you have to recall what a foreigner actually owns in Bali. Freehold land (Hak Milik) is closed to foreigners — a constitutional prohibition. The legal forms of holding are a contractual leasehold (Hak Sewa), the right of use Hak Pakai, and shares in an Indonesian PT PMA company. What is inherited differs in each case:
- Hak Sewa (leasehold) — the right under the lease contract is inherited: the heir keeps using the villa for the remaining term on the same conditions. The land stays with its Indonesian owner.
- Hak Pakai — the right of use registered with the land agency (BPN) is inherited in the heir's name, but with an immigration condition (see below).
- PT PMA shares — what is inherited is not the villa directly but the shares in the company that owns it. Those are personal property and pass under corporate law (Company Law No. 40/2007).
An heir does not receive "a villa in Bali" in the abstract, but a specific right — a contract, a Hak Pakai certificate, or a block of shares. Which right it is determines the entire procedure.
The practical takeaway: the form in which your villa is held today predetermines what your family will receive tomorrow, and how. Succession planning therefore begins not after the purchase but at the moment you choose the deal structure.
The key point — the inheritance clause in the contract
The direct answer to "is my leasehold inheritable" is: as far as the contract says it is. Hak Sewa lives by contract law, not land law — and if the contract has no clause transferring the right to heirs, some Bali leaseholds legally end on the tenant's death. The heirs then have to renegotiate from scratch with the landowner, who is free to name any terms. It is the same mechanism we covered in the piece on extending a leasehold: until a right is written into the paper, it rests on the goodwill of the owner.
What the notarial deed must contain for inheritance to work:
| Contract provision | Why it matters |
|---|---|
| Explicit inheritance clause | States that the rights under the contract pass to the tenant's heirs rather than ending on their death |
| Transfer procedure to the heir | The heir steps into the contract without renegotiating price and terms with the landowner |
| Change-of-landowner scenario | What happens if the owner themselves dies and the land passes to their relatives — the contract must bind them too |
| Right of assignment | The heir may sell the remaining term to a third party — this is their exit plan |
| Execution before a PPAT | The deed is signed by an authorised notary (PPAT), not merely "witnessed" — only then does it carry full legal force |
The notary's role here is decisive: it is the PPAT deed that turns an understanding into a protected right. A "signature-only" agreement without a notarial deed is the single most common reason heirs end up with nothing.
Hak Sewa, Hak Pakai or PT PMA: which is easiest to pass on?
The short answer: a contractual leasehold is mechanically the simplest to inherit, but PT PMA shares give the heir the most freedom and side-step the immigration limits. Let us look at all three honestly.
| Form | What is inherited | Does the heir need residency | Limitations |
|---|---|---|---|
| Hak Sewa (leasehold) | The right under the lease, remaining term | No | Inheritable only if the contract has an inheritance clause |
| Hak Pakai | Registered right of use (BPN certificate) | Yes — a KITAS or KITAP | Without residency the one-year rule to sell applies |
| PT PMA shares | Shares in the company that owns the villa | No | The company itself must be maintained (reporting, tax) |
On Hak Pakai it is important to understand the immigration trap. This right is registered in the foreigner's name at the BPN — stronger on protection than a contractual leasehold. But to inherit a Hak Pakai the heir must themselves be a legal resident of Indonesia — holding a KITAS or KITAP. If they do not, the one-year rule kicks in: the right must be sold or transferred to an eligible person within 12 months, or it reverts to the state — a direct provision of Article 21(3) of Indonesia's Basic Agrarian Law (UUPA, 1960). For a family that lives in Sydney, London, Paris or Dubai and has no plan to move to Bali, this means an inherited Hak Pakai villa would have to be sold in a hurry within a year.
PT PMA shares are free of that problem. Shares are personal property, inherited under corporate law, and the shareholder needs no residence permit. That is precisely why, for larger investments and for families who value an unhurried transfer of the asset, the company structure is often the more convenient route — we compared it with the leasehold in detail in a separate PMA vs leasehold breakdown.
The procedure for heirs, step by step
When the estate opens, the family has to work through a formal chain. It is not complicated, but it requires Indonesian documents and a local representative.
- Step 1. Certificate of inheritance. For heirs under the Civil Code (foreigners and non-Muslim Indonesians) a notary issues a deed of inheritance; for Muslim citizens the estate goes through the religious court under Islamic law. Indonesia runs three parallel systems of succession law — the Civil Code (KUHPerdata), Islamic law, and customary adat law.
- Step 2. Legalisation of documents. Foreign certificates (of death, of kinship) are translated and certified, and a will — if it is a foreign one — goes through recognition.
- Step 3. Re-registering the right. For a leasehold — entering the heir into the contract through a notary; for Hak Pakai — re-registration at the BPN; for a PT PMA — transferring the shares and updating the corporate records.
- Step 4. Paying BPHTB. The transfer duty is paid on re-registration (see the next section).
The key principle worth remembering in advance: property located in Indonesia passes under Indonesian law, regardless of the owner's nationality (the lex rei sitae principle, "the law of the place where the thing is situated"). Your citizenship does not lift the villa out of Indonesia's inheritance rules — the same way real estate in Australia or the US is governed by local succession law, not the owner's home country.
Tax on inheritance: what the heirs will pay
The direct answer: Indonesia has no separate inheritance tax. That does not make the transfer free, however — there is a tax on the re-registration of the right itself.
| Charge | Rate | When it arises |
|---|---|---|
| Inheritance tax | none | Indonesia levies no separate inheritance tax |
| BPHTB (transfer duty) | up to 5% of assessed value | On re-registering the right to the heir |
| PPh on a sale | 2.5% of the transaction amount | If the heir then sells the villa |
Rates are per Indonesian tax law as of 2026. BPHTB is calculated on the object's assessed value (NPOP, based on the NJOP cadastral valuation) less a non-taxable threshold set regionally, so the final figure is worked out with a local notary.
For the family this means: budget roughly up to 5% of the villa's value for the inheritance re-registration itself — and remember that a later sale adds another 2.5%. For context, that overall burden is far lighter than estate or inheritance taxes in many of our investors' home markets — the UK, France or the US can tax estates at rates many times higher. We walked through the tax logic across the villa's whole life cycle, from purchase to exit, in the piece on selling and exiting a leasehold.
An Indonesian will versus a foreign one
Why can you not simply rely on a will drawn up back home? Formally, a foreign will can be taken into account in Indonesia. In practice, though, local banks and land offices are reluctant to give effect to a foreign law they do not know: for such a will to work you need court recognition, translation and certification — a process that takes months, sometimes years. All that time the villa is frozen, and the heirs carry the cost and the uncertainty.
The working solution is a separate Indonesian notarial will (Wasiat) covering only your Indonesian assets. It is drawn up before a local notary and registered in the Central Will Registry (Pusat Daftar Wasiat) at the Ministry of Law and Human Rights — a document that carries the highest evidentiary weight in an Indonesian court. Indicative cost of drawing it up is around 5–15 million rupiah (roughly USD 300–900). Importantly, an Indonesian will does not revoke your home-country will — an Australian, US, British, French or German testament — they operate in parallel, each in its own jurisdiction, so they must not contradict each other over the same property.
One notarial will in Bali, for a few million rupiah, saves the heirs years of litigation and an asset frozen for the duration.
Two mistakes that lose the inheritance
Lawyers on the island keep untangling the same stories. Two mistakes come up most often — and both are set in place long before the estate ever opens.
Under a nominee arrangement the land title is held in an Indonesian's name and the foreigner is not the legal owner. If the nominee dies first — which is exactly the scenario inheritance is meant to prepare for — the land passes under Indonesian law to their relatives. The foreign "beneficiary" has no legal ground to claim the asset, and the arrangement itself is void: Indonesia's Supreme Court has repeatedly confirmed the invalidity of agreements that disguise foreign ownership of land. Heirs in that construction receive nothing. How to check whose name the land under a villa is actually in is set out in a separate breakdown.
In a marriage between a foreigner and an Indonesian citizen without a marital agreement, property is treated as jointly owned. On inheritance this creates a conflict: a share passes to the surviving foreign spouse, who cannot hold an Indonesian land title — and the same divestment rule applies. The remedy is a prenuptial or (after Constitutional Court ruling No. 69/PUU-XIII/2015) a postnuptial agreement for separation of property, executed in advance.
How DOMA handles this
Succession protection begins not with a will but with the structure of the deal — so we build it into the contract from the very start. In our leasehold notarial deed the rights of inheritance and assignment are written in explicitly: the heir steps into the contract with no fresh negotiation over price, and the renewal horizon is fixed in advance — the villa passes to the family as a clear asset with a known term, not as an occasion for a new bargain with the landowner. For investors who need a transfer free of immigration limits, we help choose between a personal leasehold and a PT PMA structure to fit the specific family situation and geography.
You can gauge cost and holding horizon in the ROI calculator, and put together a specific villa to a budget in the DOMA configurator. And if you are planning a purchase with passing it to your children in mind, say so at the consultation from the outset: we tailor the inheritance clause and the form of ownership to your country and family make-up — the paperwork and tax picture look different for an investor from Australia, the US, the UK, the EU or the UAE.
FAQ
Is a leasehold in Bali inheritable?
Yes. A leasehold (Hak Sewa) is a property right under a lease contract, and it is inherited together with its remaining term. But what passes is the right under the contract, not the land — the land is still owned by its Indonesian owner. The key condition: the contract (the notarial deed) must contain an explicit inheritance clause stating that the rights pass to the tenant's heirs. Without such a clause, some Bali contracts end on the tenant's death and the heirs have to renegotiate with the landowner.
What is the inheritance tax on a Bali villa?
There is no separate inheritance tax in Indonesia. But when the right is re-registered to the heir, BPHTB is due — a duty on acquiring rights over land and buildings, at a standard rate of up to 5% of the object's assessed value less a non-taxable threshold (per Indonesian tax law, 2026). If the heir then sells the villa, income tax PPh of 2.5% of the transaction amount is added. The exact figures depend on the regional valuation (NJOP) and allowances, so they are calculated with a local notary.
What does a foreign heir need in order to inherit a villa?
It depends on the form of ownership. A Hak Sewa contractual right passes to the heir under the terms of the contract itself — no residency is required. A Hak Pakai (right of use registered at the BPN land agency in a foreigner's name) requires the heir to hold a valid KITAS or KITAP; if they do not, the one-year rule applies — the right must be sold or transferred to an eligible person within 12 months, or it reverts to the state (Art. 21(3) of the Basic Agrarian Law). PT PMA shares are inherited as personal property and side-step that limit.
Will my home-country will work in Bali?
Formally a foreign will can be taken into account, but in practice Indonesian banks and land offices are reluctant to give effect to a foreign law they do not know: it requires court recognition, translation and certification — months, sometimes years. It is far safer to draw up a separate Indonesian notarial will (Wasiat) covering only your Indonesian assets and register it in the Central Will Registry at the Ministry of Law. Indicative cost is around 5–15 million rupiah (roughly USD 300–900). It does not revoke your home-country will — the two run in parallel, each over its own jurisdiction's property.
Does a nominee arrangement protect the heirs' rights?
No — quite the opposite; it is the most exposed option. Under a nominee arrangement the land title is held in an Indonesian's name and the foreigner is not the legal owner. If the nominee dies first, under Indonesian law the land is inherited by their relatives, and the foreign 'beneficiary' has no legal ground to claim the asset. Indonesia's Supreme Court has confirmed such arrangements are void. The only inheritable construction is the legal one: a contractual leasehold, Hak Pakai, or PT PMA shares.