Buying a Home in Madrid as a Foreigner: Taxes and Costs Explained
What a foreign buyer actually pays on top of the price in the Comunidad de Madrid: transfer tax or VAT, stamp duty, notary, land registry and mortgage costs, with a worked example.
Buying a resale home in the Comunidad de Madrid costs the price plus 6% transfer tax (Impuesto de Transmisiones Patrimoniales, ITP) and a few thousand euros in fees. A new build from a developer carries 10% IVA (VAT) plus 0.75% stamp duty instead. Foreigners pay the same taxes as Spaniards and need an NIE, as of November 2026.
Which tax applies: ITP or IVA?
The tax depends on who sells, not on your nationality or residence.
- Resale home (bought from a private owner, or a second sale): ITP, a regional tax. The general rate in the Comunidad de Madrid is 6%.
- New build (first sale by the developer): IVA at 10% for homes, plus Actos Jurídicos Documentados (AJD, stamp duty on the deed), 0.75% in Madrid at the general rate.
Madrid’s 6% is among the lowest general ITP rates in Spain. Some reliefs exist for specific groups, such as large families or young buyers of a main home under a price limit. In October 2026 the regional government announced a cut to 4% for buyers under 40 purchasing a resale home, which appears in its 2027 budget plans. As of mid-November 2026 it had not been confirmed as in force, so check the Comunidad de Madrid’s tax pages or ask the notary before relying on it.
What does a €300,000 flat cost in total?
The table shows the taxes, which are fixed percentages, and typical ranges for fees. Fees are estimates; ask for quotes from the notary, gestoría and bank.
| Cost | Resale flat, €300,000 | New build, €300,000 |
|---|---|---|
| ITP (6%) | €18,000 | Not applicable |
| IVA (10%) | Not applicable | €30,000 |
| AJD on the purchase deed (0.75%) | Not applicable | €2,250 |
| Notary (purchase deed) | Set by official fee schedule; ask for a quote | Same |
| Land Registry | Set by official fee schedule; ask for a quote | Same |
| Gestoría (filing taxes and registration) | Optional, priced by each firm | Same |
| Valuation (if you take a mortgage) | Paid by the buyer | Same |
| Taxes alone | €18,000 | €32,250 |
Notary and registry fees follow official schedules (aranceles) and rise slowly with the price. Budget roughly 7% to 8% of the price for a resale home and 11% to 12% for a new build, including fees, and confirm with real quotes.
What does a mortgage add for a non-resident?
Since the 2019 mortgage credit law, the bank pays the notary fees for the mortgage deed, its registration, the gestoría it chooses and the stamp duty on the mortgage. You pay the property valuation (tasación) and any copies of the deed you request. Banks usually lend a lower share of the price to non-residents than to residents and ask for more documents, such as tax returns from your home country. Compare the APR (TAE), not only the interest rate, and check any linked products the bank asks you to take.
What do you need before you sign?
- NIE. The foreigner’s identity number is required for the deed and the tax return. See how to get an NIE in Madrid; in Spain you book it through the cita previa de extranjería service, and from abroad through a Spanish consulate.
- Spanish bank account. Needed for payments and the mortgage. See opening a bank account in Madrid.
- Land Registry extract (nota simple): confirms the owner and any mortgages or charges on the property.
- Private reservation or deposit contract (arras): usually around 10% of the price. Under the common arras penitenciales, you lose it if you pull out, and the seller pays you double if they do.
- Deed at the notary (escritura), followed by payment of ITP or AJD and registration.
The tax is filed with the Comunidad de Madrid within 30 working days of the deed. If you buy from a non-resident seller, you must withhold 3% of the price and pay it to the Spanish tax agency on the seller’s behalf; the notary will remind you.
Are there extra costs after buying?
Yes. Expect yearly property tax (IBI) from the city council, community fees if the flat is in a building, and home insurance, which is usually required with a mortgage. Non-resident owners who do not rent the home out also file a yearly non-resident income tax return on the property. If you plan to rent it to tourists, read the tourist flat rules in Madrid before buying: many central buildings cannot host them.
Bottom line
Ask the seller for the latest IBI receipt, a community certificate showing no debts and the energy certificate before signing the arras. Have the arras contract reviewed by an independent lawyer, since it fixes who loses money if the sale falls through.
FAQ
Do foreigners pay more tax to buy in Madrid?
No. As of November 2026, ITP, IVA and AJD rates are the same for Spanish and foreign buyers, resident or not.
Can I buy property without being resident in Spain?
Yes. You need an NIE and normally a Spanish bank account. Buying a home does not by itself give you a residence permit.
Do I need a lawyer to buy a flat in Spain?
It is not compulsory, since the notary checks the deed, but an independent lawyer can review the arras contract, debts on the property and planning issues before you commit money.
How long does a purchase take?
Often one to three months from the arras to the deed, longer with a mortgage. Registration at the Land Registry follows within weeks.
For complex cases, such as buying through a company or with inherited funds, check with a lawyer or asesor fiscal.
