Hello Linear,
"They denied living in Jakarta"
The sentence is correct, but you gave the components partly wrong names.
" They " is the subject; that is correct.
"denied" is the predicate and it is a verb in the past simple tense.
"living in Jakarta" is the object.
"living" is not a verb ,it is a verbal noun. A verbal noun is a noun formed from a verb; in this example by adding "ing" to the verb * to live* .