Buying property in Madrid as an American non-resident

Buying property in Madrid as an American is perfectly legal and relatively simple if you know where to start. The complicated part isn't the law, it's the bureaucracy. A specialized lawyer is worth every euro.

Documentation you need

NIE (Foreigner Identification Number). Critical. You can't buy without NIE. The tax NIE (not the police one) is what you'll use in real estate transactions. If you don't have it yet, apply at the tax authority in your first weeks.

Valid passport. Original.

Proof of funds origin. If you're paying cash, the tax authority requires you to prove where the funds come from. US bank statements from the last 3-6 months. This prevents money laundering.

US tax declarations. Last 2 years (1040). Some notaries require this to confirm solvency.

If mortgage: bank documentation (see mortgage section below).

Apostilled documentation. Any document from the US you use (bank statements, employment letters, investment letters) must be apostilled.

Lawyer and tax advisor

You need both. The lawyer (attorney specializing in real estate law) reviews contract, protects your rights, handles deed execution. The tax advisor (gestoría) handles taxes, documentation with the tax authority, obtaining tax NIE.

Budget: lawyer €1,500-3,000 per transaction, tax advisor €500-1,500. Worth every cent.

Don't use the seller's or agent's lawyer. You need your own lawyer.

Purchase process

1. Visit property, negotiate price. Use a real estate agent (inmobiliaria) who speaks English. All agents in Madrid speak some English.

2. Agree on price, sign purchase contract (contract of earnest money). Typically you deposit 10% of the price as "arras" (earnest money). This money goes toward the purchase.

3. Lawyer reviews contract. Verifies that property is free of liens (prior mortgages), that taxes are current, that there are no illegal occupants, that property registry is correct.

4. Obtain mortgage if you need it. (See section below)

5. Buy property insurance. Covers fire, theft, etc. Mandatory if there's a mortgage.

6. Sign deed before notary. This is official. You, seller, lawyers, and notary sign. Notary verifies identities, document signatures. Notary cost: ~0.5-1% of purchase price.

7. Property registration. Lawyer manages inscription in the registry. Takes 2-4 weeks.

Mortgage for Americans

Some Spanish banks give mortgages to Americans, but with conditions:

• You need NIE
• You need residency in Spain (TIE + padrón)
• You need employment contract or demonstrable income
• Maximum 70-80% of property value (more restrictive than for Spanish nationals)
• Interest rate typically ~3-4% (better than the US right now)

Banks friendly with Americans: Santander, BBVA, ING.

Typical term: 20-30 years. Monthly payments include principal + interest + insurance.

If you pay cash: easier, no income requirements. You just prove funds origin.

Costs of purchase

Besides property price:

• Property Transfer Tax (ITP): 6-8% of price (varies by autonomous community). In Madrid it's 6%.
• Notary costs: 0.5-1% of price.
• Registry costs: ~0.1% of price.
• Lawyer: €1,500-3,000 fixed.
• Tax advisor: €500-1,500 fixed.
• Inspection/appraisal: ~€300 if needed.

Example: you buy an apartment for €300,000.

• ITP: €18,000
• Notary: €1,500-3,000
• Registry: €300
• Lawyer: €2,000
• Tax advisor: €1,000
• Total costs: ~€22,800-24,800 (7.6-8.3% of price)

Taxes after purchase

Property Tax (IBI): annual tax on property. Varies by location, ~0.4-0.6% of cadastral value (which can be lower than purchase price). In Madrid typically €200-500 annually for an apartment worth €300,000.

Capital gains tax: if you sell later, you pay tax on appreciation. This is calculated at sale, not at purchase.

As an American: Spanish tax authority requires you to report the property in your tax declaration. Some Americans forget this.

Realistic timeline

Ideally: you find a property (1-2 months), negotiate (2 weeks), sign earnest money (1 day), request mortgage if needed (2-3 weeks approval), sign deed before notary (1 month wait + 1 day signing), registration (2-4 weeks).

Total: 4-6 months from start to having the keys.

Realistically: 6-8 months if there are complications (slow mortgage, registry issues, negotiation delays).

Common mistakes

Not obtaining NIE first. If you don't have NIE, everything stops. Get tax NIE before you start looking at property.

Signing documents without your lawyer reviewing them. Some Americans feel pressured by the seller or agent to sign quickly. Don't. Your lawyer reviews first.

Assuming that a US "deed" and a Spanish escritura are the same. They're not. Completely different processes. In Spain, the notary is an official intermediary, not a lawyer for either side.

Not budgeting closing costs. Many forget there's 7-8% in additional costs. Budget well.

Buying without professional inspection. Some apartments have moisture problems, plumbing issues, etc. Pay an inspector before signing.

The point

Buying in Madrid as an American is viable. You need a lawyer, tax advisor, patience, and budget for costs. If you do it right, you have property as an investment or residence at a very accessible price compared to the US.

If your purchase is with Aedara, we coordinate everything: find property, negotiate, connect with lawyer and tax advisor, handle documentation. If you do it alone, use a trusted agent and hire your own lawyer.