Get Ready! Home Prices Will Be Much More Expensive Next Year, Here’s Why

JAKARTA – Chairman of Real Estate Indonesia (REI) Joko Suratno revealed that house prices in 2025 will be much more expensive than the previous 2 years. The reason is the increase in taxes collected by the Government for Value Added Tax (PPN) of 12% which will come into effect early 2025.

Joko gave an example, if you want to buy a house for Rp1 billion with 11% VAT this year, the tax borne by the consumer is Rp110 million alone. Then it will increase to 12% in early 2025, then the VAT borne by the consumer will be Rp120 million, or an increase of Rp10 million next year just for tax. Not to mention paying installments and bank interest that must also be borne by the consumer.

“We also see that the government must get income, but we also have to look at the condition of society, the economic condition, so that what the government does can produce something productive,” he said when contacted by MNC Portal, Monday (16/9/2024).

Furthermore, Joko admitted that until now there has been no discussion with the government regarding the provision of fiscal incentives in the form of VAT DTP (Borne by the Government), as was done several years ago.

“We have not had any discussions regarding the provision of DTP VAT for 2025,” he added.

This is what he said, the price of new houses for next year will be much more expensive if the government does not provide stimulus. In addition to the purchasing power of the community that Joko saw has not recovered enough to buy a house, it will make it difficult for people to have a residence.

“Now there is still pressure on people’s purchasing power, so hopefully we can postpone (the tax increase) until conditions are better,” Joko hoped.

Not only that, starting in 2025, VAT on Self-Building Activities (KMS) will also increase from the previous 2.2% to 2.4%. KMS is the activity of building a building, either a new building or an expansion of an old building, which is not carried out in business activities or work for personal use or for others.

What is included in KMS is building a building for an individual or an entity carried out by another party. Self-Building or KMS activities are carried out not in the context of the Agency’s business activities whose results are enjoyed by themselves or other parties.

This means that Self-Building Tax is a tax imposed on individual and corporate taxpayers which is used for the individual concerned and not for business purposes.

“This KMS tax will certainly have an impact on the costs that we have to pay because there is an increase in taxes like this KMS, so we have to be more efficient,” said Joko.

(fch)