Tax
US and Canadian buyers: reporting Indonesian property and income
In short: the US and Canada both tax their residents on worldwide income, so rent and gains from a Lombok property must be reported at home, with a credit for Indonesian tax. The bigger risk for North American owners is the information returns: forms that carry heavy penalties even when no tax is due. For Americans, that means FBAR for an Indonesian bank account, and possibly Form 8938 and Form 5471 if you own through a PT PMA. For Canadians, it means the T1135 once foreign property costs more than C$100,000, and possibly the T1134.
The Indonesian side of the tax is the same for everyone and is covered in our guides to rental income and selling. This article covers what changes when you file in the US or Canada. Rules and thresholds are as of October 2026.
United States
US citizens, green card holders and other US tax residents are taxed on worldwide income, wherever they live (Taxes for Expats, September 2026).
Rental income
- Schedule E. Rent and expenses from a property you own directly are reported on Schedule E, converted to US dollars at a rate you can support.
- Depreciation over 30 years. Foreign residential rental buildings placed in service after 2017 are generally depreciated under the Alternative Depreciation System over 30 years. Land is not depreciable.
- Foreign tax credit. Indonesian income tax on the rent can be claimed as a credit on Form 1116, within the form's limitation, or as a deduction. The credit is usually worth more.
- No earned-income exclusion. Rent is not earned income, so the foreign earned income exclusion does not shelter it, even if you live abroad.
Information returns
| Form | When it applies to a Lombok owner | Threshold |
|---|---|---|
| FBAR (FinCEN 114) | You have an Indonesian bank account, for example one receiving rent | Combined foreign accounts above US$10,000 at any time in the year |
| Form 8938 (FATCA) | You own shares in a PT PMA, or hold other foreign financial assets. Property held directly is not reportable | For filers living abroad: US$200,000 at year-end or US$300,000 at any time (single); double for joint filers |
| Form 5471 | You own or control a stake in a PT PMA and meet one of the form's filing categories | Depends on ownership and control tests |
Sources: Taxes for Expats; Greenback. Thresholds for filers living in the US are lower for Form 8938.
The FBAR for 2025 accounts was due on 15 April 2026, with an automatic extension to 15 October 2026. Non-wilful failure to file can cost up to US$16,536 per form, adjusted for inflation each year (Greenback).
Owning through a PT PMA
A PT PMA is an Indonesian company, and US rules for foreign companies are complex: Form 5471, and possibly the rules that tax some of a controlled foreign company's income to its US shareholders each year. Before setting up a PT PMA, have a US international tax adviser confirm how it will be classified and taxed. For a single villa, direct ownership through a lease is often far simpler for an American.
Selling
The gain is reported in US dollars. Property held more than a year qualifies for long-term capital gains rates, and the Indonesian tax on the sale can be credited. Depreciation you claimed, or could have claimed, is taxed separately on sale.
Canada
Canadian residents are taxed on worldwide income, and Indonesian tax paid is generally creditable against Canadian tax on the same income.
Rental income
- Report it with your other rental income, converted to Canadian dollars, deducting the expenses Canadian rules allow, including capital cost allowance if you choose.
- Foreign tax credit. Claim Indonesian income tax paid on the rent as a foreign tax credit, within the usual limits.
Form T1135: foreign property over C$100,000
The T1135 is the form Canadians most often miss (Advisor.ca):
- Threshold. You must file if the total cost of your specified foreign property exceeded C$100,000 at any time in the year. Cost, not market value, and the full cost even if you borrowed.
- Rental property counts. A property rented out with a reasonable expectation of profit is specified foreign property.
- Personal-use property does not. A holiday home used primarily (more than 50%) by you and your family is excluded, as is a property rented only to recover some costs.
- Shares count. Shares in a PT PMA are specified foreign property.
- Income is reported on the form as well, gross.
If you own 10% or more of a foreign company, such as a PT PMA, alone or with related persons, a separate information return, Form T1134, may also be required.
Selling
Capital gains are calculated in Canadian dollars; currently half of a capital gain is included in taxable income. If the Lombok property was your principal residence, ask your adviser whether the exemption can apply to it.
A checklist for North American owners
- Keep a register of every payment for the property, with the exchange rate on the day.
- Keep Indonesian tax payment slips; you need them for the credit.
- US: check the FBAR every year once you open an Indonesian account.
- US: before forming a PT PMA, get US advice on classification and Form 5471.
- Canada: add up the cost of all your foreign property each year against the C$100,000 T1135 threshold.
- Canada: decide, and document, whether the property is rental or primarily personal use.
- Both: tell your home adviser if your use of the property changes, for example from personal to rental.
We work with North American buyers and can introduce you to cross-border advisers. Message us on WhatsApp.
FAQ
Does buying land in Lombok trigger an FBAR?
No. Property is not a financial account. An Indonesian bank account, or a notary's escrow account in your name, may.
Is a lease "specified foreign property" for the T1135?
A leasehold interest used to earn rent generally is. Ask your adviser how to value it.
Do I need an Indonesian tax number?
If you earn Indonesian income or own a PT PMA, usually yes. Your notary and tax adviser will tell you when.
Can my US or Canadian accountant handle the Indonesian side?
Rarely. Use an Indonesian tax adviser for Indonesian filings and a home adviser who knows foreign property for the rest.
This article is general information, not tax advice. US and Canadian rules are complex and change often; use a qualified cross-border adviser. See our investment disclaimer.