Jakarta. The Indonesian government has officially extended its value-added tax (VAT) exemption for property purchases until 2026, aiming to stimulate the housing sector and broader economy.

Under the incentive, the government will cover the full VAT on purchases of ready-to-occupy homes or new properties priced up to Rp 2 billion ($120,431). For homes priced between Rp 2 billion and Rp 5 billion, the exemption applies only to the first Rp 2 billion, while the remaining amount is subject to the normal VAT rate.

“The VAT incentive for the property sector was approved by the Housing Ministry and the Finance Minister. This scheme will remain in effect until 2026, so the Rp 2 billion coverage will still apply next year,” Coordinating Minister for Economic Affairs Airlangga Hartarto said at a press conference in Jakarta on Monday.

The extension is part of the government’s broader economic policy package for 2025–2026. Airlangga said the facility can be used for home purchases worth up to Rp 5 billion ($301,081), with the first Rp 2 billion absorbed by the government and the remainder paid by the buyer.

Previously, the housing VAT incentive was set to expire at the end of 2025 under Finance Ministry Regulation No. 60/2025.

The policy applies to both Indonesian citizens and eligible foreign nationals under property ownership regulations. However, it is limited to one residential unit per buyer. The benefit cannot be used if more than one unit is purchased, if a down payment was made before the regulation took effect, or if the property is resold within one year.

The government hopes the extended tax relief will encourage home ownership while supporting construction, real estate, and related industries as part of its growth agenda.