Owning some holiday villas and properties in Bali could indeed results in a very profitable business venture. Renting out your property in Bali might be a convenient method to supplement your income. However, owning a holiday villas in this island and renting it out is not as simple as it seems. Behind that lies the tax, running costs, and other crucial things a villa owner needs to know.
Purchasing Your Bali Holiday Villas and Dealing with Purchasing Tax
Once you purchase your Bali holiday villas in local property site like Kibarer, it would be simple to list your house for rent on sites like Airbnb, HomeAway, VRBO, or Indonesian local unicorns Traveloka and Tiket.com. However, if you do not prepare, you may discover that becoming a host is difficult and even costly. And that’s not only the cost of purchasing your villa—but also purchasing tax, income tax, maintenance costs, and other hidden fees you might not know before.
First, you have the purchasing tax to deal with when you buy the villa. A ten percent tax must be paid to the government when purchasing or selling property in Bali. Typically, this tax is split 50/50, leaving each buyer and seller with a 5% tax to pay. You must pay annual taxes if you own a property, whether it is leased or freehold. Taxes are due at the government office, and it is your obligation to ensure that they are paid. This tax is typically quite modest, and it is determined by the size and location of your land, as well as the size of any structures on it.
Income Tax for Villa Owners in Bali
You must pay income tax on all bookings/transactions while renting out your home, regardless of whether you are an Indonesian citizen or do not have an Indonesian tax identification. Villas with a maximum of five bedrooms in approved tourism zones can apply for a Pondok Wisata license, which permits them to conduct a daily rental company based on tourism. Those who live in residential areas can apply for a Rumah Kos (Guest House) license, which permits them to rent out a maximum of 10 rooms. If the property is owned by a real business entity, licenses must be in the name of the legal landlord or a company director in both circumstances, and a local tax ID must be provided.
Service Fees for Listing Your Villa in Travel Sites
While Indonesian local unicorns travel startup Traveloka and Tiket.com doesn’t charges fees for host, Airbnb charges hosts a 3% fee to cover the cost of payment processing. This is similar with VRBO by HomeAway that also charges hosts to list their properties on the site. People who want to use the site frequently can promote their home for $349 per year and avoid paying a fee on each booking. Those who rent their houses out on a less frequent basis can avoid the yearly charge by paying a 10% commission on each booking booked through the site.
Managing Villa Supplies
As a villa owner, you are responsible to provide guests with fresh bedding, towels, and other amenities. Purchasing a second set of linens may be necessary depending on how frequently you will be entertaining guests. If you want to keep specific rooms and closets off limits while guests are staying in the house, you may need to invest in locks.
Regular Cleaning Cost
Before and after you rent out your Bali holiday villas, you’ll undoubtedly need to spend some time cleaning it. You can clean it by yourself, which will be more cost-effective but require a lot of your time and energy. Alternatively, you can hire a cleaning service, but this will add up to the overall cost of running the villa.
Insuring Your Bali Holiday Villas
Short-term rentals are covered by certain house insurance plans. However, having numerous short-term visits by different guests in your villa, the insurance provider may require you to purchase a commercial coverage that covers a hotel or a bed and breakfast. The average insurance companies in Bali have villa package especially formulated for Bali holiday villas owners. This packages usually have comprehensive protection against all hazards, including structures, swimming pools, furnishings, electronics, machinery, and office supplies. To find out what is covered, contact your insurance carrier.