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• VAT Exemption for Property Purchases Extended until 2027, Supporting the Real Estate Market and the Real Economy

VAT Exemption for Property Purchases Extended until 2027, Supporting the Real Estate Market and the Real Economy

The government has officially extended the Value Added Tax Exemption (VAT Exemption) incentive for property purchases until 31 December 2027.
This policy applies to houses priced up to Rp5 billion, where VAT on the first Rp2 billion is borne by the state.
This extension is expected to benefit approximately 40,000 housing units per year, while maintaining momentum in the housing sector amid a slowdown in household consumption.

A Policy Providing Greater Certainty
This extension of the incentive provides medium-term certainty for developers and buyers.
Following its previous expiration at the end of 2024, the additional three-year period gives developers more time to plan their projects more effectively, and gives the middle class more time to prepare for their first home purchase.

For the real estate market, this policy functions as a demand stabiliser, maintaining buyer interest even as global economic conditions have not fully recovered.

Ripple Effects on the Real Economy
The housing sector has a strong multiplier effect on the economy.
Each construction activity drives demand across various sectors from cement, steel, to furniture and interior design services.
With the extended VAT Exemption policy, construction and manufacturing supply chains have the potential to accelerate, creating jobs and strengthening regional economic growth.

Data from Real Estate Indonesia (REI) shows sales recovery of 10–15% YoY since this incentive was implemented in 2024, which signals that fiscal stimulus in this sector is beginning to show results.

Strategic Impact on Property Emitters
For major property emitters such as Ciputra (CTRA), Bumi Serpong Damai (BSDE), Summarecon (SMRA), Pakuwon (PWON), and Delta Mas (DMAS), the extension of the VAT Exemption provides greater visibility and stability in pricing and demand.
The residential segment in the Rp1–2 billion price range becomes more competitive, driving new project pipelines targeting the middle class.

Additionally, this policy also helps maintain market liquidity and reduce inventory pressure, which has been a major challenge for developers over the past two years.

Implications for Growth Prospects
From a macro perspective, this policy contributes to stability in domestic consumption and non-state-owned enterprise investment in the real sector.
The government is utilising fiscal stimulus in a more targeted manner, not only to maintain purchasing power, but also to support the construction sector's contribution to GDP, which has been one of the engines of Indonesia's economic growth.

Our Take
For investors, this policy affirms the government's consistent policy direction in supporting domestic sector-based growth.
With certainty until 2027, the real estate sector regains visibility, both in terms of demand and project sustainability, which could be a positive catalyst for Indonesia's economy and capital markets.