Buying Property in Madrid: All the Real Taxes and Costs

When budgeting for a property purchase in Madrid, the asking price is just the starting point. On top of it, you need to add taxes and fees that range from 6% to over 11% of the purchase price, depending on whether the property is new-build or second-hand. This is one of the biggest surprises for international buyers who arrive without this context.

First distinction: new-build or resale?

The tax treatment changes completely depending on the nature of the property:

• New-build (first sale, directly from the developer): you pay VAT (IVA, 10% of the price) plus Stamp Duty (Impuesto de Actos Jurídicos Documentados — AJD).
• Resale (any property sold after its first owner): you pay Transfer Tax (Impuesto de Transmisiones Patrimoniales — ITP), without VAT or AJD.

This distinction matters enormously. The vast majority of transactions in established neighbourhoods like Salamanca, Chamberí, or Retiro are resales.

ITP (Transfer Tax) — resale properties

ITP is the main tax on resale purchases. It is a regional tax, meaning the rate varies by autonomous community. In the Community of Madrid, the general rate is 6% — one of the lowest in Spain. Catalonia charges 10–11%.

| Purchase price | ITP in Madrid (6%) | |---|---| | €300,000 | €18,000 | | €500,000 | €30,000 | | €800,000 | €48,000 | | €1,200,000 | €72,000 |

ITP must be paid to the Community of Madrid within 30 days of signing the public deed.

VAT and Stamp Duty — new-build properties

If you are buying directly from a developer, the taxes are:

• VAT (IVA): 10% of the purchase price. For subsidised housing (VPO), the reduced rate is 4%.
• AJD (Stamp Duty): in Madrid, the general rate is 0.75% of the purchase price. Discounts apply for buyers under 35 or for protected housing.

Example for a new-build at €500,000:

• VAT: €50,000
• Stamp Duty: €3,750
• Total taxes: €53,750

Notary and land registry fees

Beyond taxes, the transaction carries fixed costs tied to the purchase price:

Notary fees: Regulated by government tariffs, based on the declared price. For a €500,000 transaction, expect €700–1,200. If there is a mortgage, the bank covers its own notary costs since the 2019 mortgage law reform.

Land Registry: Registering the purchase typically costs 50–70% of notary fees. For the same €500,000 transaction, roughly €400–700.

Gestoría (processing firm): Hiring a gestoría to handle the paperwork — strongly recommended for non-resident buyers — costs €300–600. If you take a mortgage, the bank imposes its own gestoría.

Total cost breakdown — resale property

For a resale flat at €500,000 in Madrid:

| Item | Estimated cost | |---|---| | ITP (6%) | €30,000 | | Notary | €900 | | Land Registry | €500 | | Gestoría | €400 | | Total acquisition costs | ~€31,800 | | As % of purchase price | ~6.4% |

For a new-build at the same price:

| Item | Estimated cost | |---|---| | VAT (10%) | €50,000 | | Stamp Duty (0.75%) | €3,750 | | Notary | €900 | | Land Registry | €500 | | Gestoría | €400 | | Total acquisition costs | ~€55,550 | | As % of purchase price | ~11.1% |

Key rules for non-resident buyers

Non-residents pay exactly the same taxes as residents — there is no surcharge for being foreign.

However, two rules are specific to non-resident transactions:

3% retention (IRNR withholding): If the seller is a non-resident in Spain, the buyer must withhold 3% of the purchase price and pay it to the tax authority. This applies only when buying from a non-resident seller.

Lower mortgage LTV: Spanish banks typically lend up to 60–70% of the appraised value for non-residents, versus 80% for residents. This affects how much capital you need available before the purchase. See our guide on mortgages in Spain for non-residents for details.

What is not included in these figures

Some costs sit outside the tax calculation but appear in every transaction:

Estate agent commission: In Madrid, the vendor typically pays the agent's fee (3–5% of the price). Some agents charge the buyer, but this is not standard.

Valuation (tasación): Required if taking a mortgage. Always at the buyer's expense: €300–600.

Translation and interpretation: For buyers who do not speak Spanish and need assistance at the notary, budget €200–500 depending on duration.

Property taxes and municipal gain tax: These are the seller's responsibility, but it is worth verifying they are current before signing.

Payment deadlines

Deadlines are strict and missing them generates automatic surcharges:

• ITP and VAT: 30 working days from the deed date.
• AJD: same deadline as ITP.
• Land Registry: no legal deadline, but register promptly to protect the title against third parties.

The form used for ITP and AJD is the Modelo 600, presented at the Community of Madrid tax office or through your gestoría.

Acquisition costs and the price per square metre

In premium areas like Salamanca or Jerónimos, where prices exceed €7,000–8,000/m², the acquisition taxes on an 80 m² flat can exceed €35,000. Understanding these figures upfront allows you to budget accurately, avoid surprises at the notary, and structure your financing with real numbers.

If you are weighing a purchase as part of a relocation to Madrid, Aedara helps you coordinate from property search through signing, with all the specialists you need at each stage.

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References:

• Community of Madrid — Property Transfer Tax and Stamp Duty.
• Agencia Tributaria — Modelo 600. ITP and AJD settlement.
• Law 2/1994 on mortgage subrogation and modification.