Gifting Land and Buildings to a Child in Indonesia: Requirements and Taxes

A gift (hibah) of land and buildings to a child is made with a deed of gift (akta hibah) signed before a PPAT (land deed official), while the parent who gives it is still alive. The deed of gift is then registered at the Kantor Pertanahan (Land Office) so that the certificate passes into the child's name. On tax, a gift to a biological child is exempt from income tax (PPh) through a certificate of exemption, but the child as recipient still pays BPHTB (land and building acquisition duty) under the regional rules.

A gift under the law: the basic requirements

Article 1666 of the KUHPerdata (Indonesian Civil Code) defines a gift as a free transfer that cannot be withdrawn, and recognises it only between living persons. If the owner has already died, the transfer is inheritance, not a gift. Other requirements:

• The object already exists and belongs to the giver when the gift is made (Article 1667 KUHPerdata).
• The giver has legal capacity and gives voluntarily.
• The recipient expressly accepts the gift; the gift binds only from that acceptance (Article 1683 KUHPerdata).
• The form is an authentic deed. For land, the deed is a deed of gift made by a PPAT, because a transfer of rights can only be registered on the basis of a PPAT deed (Article 37 PP 24/1997, the Government Regulation on land registration).
• The giver's spouse must consent if the land is marital joint property (harta bersama) (Article 36 UU 1/1974, the Marriage Law).

A limit to note: the reserved share of other heirs

A gift to one child can affect the rights of the other children later, as heirs.

• Under the KUHPerdata, a child as a direct-line heir has a reserved share (legitieme portie) that cannot be reduced by a gift or a will (Articles 913–914). An heir whose reserved share is infringed may claim a reduction (Article 920). A gift to a child is also, in principle, taken into account in dividing the estate (inbreng, collation), unless the giver releases it from this (Article 1086 and following).
• Under the Kompilasi Hukum Islam (KHI, Compilation of Islamic Law), a gift may be at most one third of the giver's assets, made before two witnesses, by a giver aged at least 21 (Article 210). A gift from parents to their child may be counted as inheritance (Article 211).

The law does not require the other children's consent. Even so, many families record the other children's knowledge or consent to reduce the risk of a dispute later. For families arranging the division of their assets as a whole, a gift can be considered together with a will.

Taxes on a deed of gift of land to a child

The giver's income tax (PPh). A gift is a transfer that is in principle subject to final income tax of 2.5% of market value (PP 34/2016). However, Article 6(b) of PP 34/2016 exempts a gift from an individual to blood relatives in the direct line of one degree, that is, parents to a biological child, provided there is no business, employment, ownership or control relationship between them. The exemption is given through a certificate of exemption (surat keterangan bebas, SKB) for income tax (Article 200 PMK 81/2024, the Minister of Finance Regulation), which is obtained before the deed is signed.

The recipient's BPHTB. A gift is subject to BPHTB, which falls due when the deed of gift is signed (Articles 44 and 49 UU 1/2022, the Law on Central and Regional Government Financial Relations, HKPD). The formula is: rate × (NPOP − NPOPTKP), where NPOP (the acquisition value) is the market value and NPOPTKP is the non-taxable acquisition value. The NPOPTKP is generally given only for a taxpayer's first acquisition in that region. For property in Jakarta, the rate is 5% and the NPOPTKP is Rp250 million (Perda DKI Jakarta 1/2024, the Jakarta regional regulation). The Jakarta provincial government also grants an ex officio 50% reduction for a gift from blood relatives in the direct line of one degree.

Example (Jakarta, market value Rp1.5 billion, the child's first acquisition in Jakarta):

• BPHTB before the reduction: 5% × (Rp1,500,000,000 − Rp250,000,000) = Rp62,500,000
• After the 50% reduction: Rp31,250,000

In other regions, the NPOPTKP amount and whether any reduction applies follow each region's own regulations.

How a deed of gift of land is made

1. The family decides the property and the recipient of the gift, including whether other children should be told.
2. The documents are handed to the PPAT, who checks the certificate at the Land Office.
3. The giver applies for the income tax SKB; the recipient pays BPHTB and has it validated.
4. The giver, the giver's spouse and the recipient appear before the PPAT with two witnesses. The PPAT reads out the deed, and the deed is signed.
5. The PPAT submits the deed to the Land Office no later than seven working days after signing (Article 40 PP 24/1997).
6. The Land Office records the transfer and issues an electronic certificate in the child's name.

A gift to a minor child

A gift to a minor who is still under parental authority is accepted by the parent who exercises that authority (Article 1685 KUHPerdata). The difficulty is that this parent is often also the giver. Note also that once the land belongs to the child, the parents may not transfer it while the child is under 18, unless the child's interests require it (Article 48 UU 1/1974).

Documents to prepare

The giver

• KTP (identity card) and kartu keluarga (family card)
• Marriage certificate, and the presence or consent of the spouse if the land is joint property
• Original certificate, or access to or an official copy of the electronic certificate
• SPPT PBB (annual land and building tax assessment) and proof of payment
• PBG or IMB (building approval or building permit), if any
• Income tax SKB for the gift

The recipient

• KTP and kartu keluarga
• Birth certificate, to prove the relationship as a biological child
• Proof of BPHTB payment that has been validated

Frequently asked questions