Jakarta. The Indonesian government has extended its value-added tax (VAT) incentive for house purchases until the end of 2027, aiming to provide long-term certainty for the property sector and sustain middle-class demand.

Chief Economic Minister Airlangga Hartarto said on Thursday the fiscal relaxation would ensure stability for both developers and homebuyers, marking the first time the government has provided a two-year certainty period for property incentives. “This is the first time the property sector is given certainty for the next two years,” Airlangga said in Jakarta.

Under the incentive, buyers of landed houses or apartment units priced up to Rp 5 billion ($300,000) are eligible for the scheme, with a maximum taxable base of Rp 2 billion covered by the VAT discount. The government will fully bear the VAT for house purchases valued up to Rp 2 billion, while those priced up to Rp 5 billion will only receive the full exemption for the first Rp 2 billion portion of the sale value.

“The government wants to give supply-side certainty to developers to continue building homes,” Airlangga said.

Finance Minister Purbaya Yudhi Sadewa added that the extension was intended to preserve middle-class purchasing power while stimulating the property market, which has a strong multiplier effect on the economy.

“The 100 percent government-borne VAT facility is extended for homes priced up to Rp 5 billion, with the full exemption applying to the first Rp 2 billion. Initially set to end in December 2026, it will now run until December 2027,” Purbaya said.

According to Purbaya, the Finance Ministry plans to allocate the VAT relaxation for around 40,000 housing units per year, supported by a forthcoming Minister of Finance Regulation outlining the program’s technical implementation.

“This will serve as a fresh stimulus for the property market and help drive overall economic growth,” he said.

Previously, under Finance Ministry Regulation (PMK) No. 13/2025, the VAT incentive granted a 100 percent exemption for house purchases made between January and June 2025, and 50 percent for those between July and December 2025. The government later decided to maintain the full exemption through the end of 2025 before this latest extension.