Buying property in Madrid: a step-by-step guide

Buying a property in Madrid is not complicated if you know the process in advance. The stages are clearly defined by Spanish law and notarial practice, and each one has its timescales and conditions. What creates problems — delays, unexpected costs, conflicts with the seller — almost always stems from not having properly understood one of those stages before committing to it. This guide covers the complete process.

From search to offer: the stages before the arras deposit

An active property search in Madrid begins before the first viewing. The first step is defining real criteria — zone, property type, minimum floor area, maximum budget including costs — and not just ideal preferences. That difference seems obvious but is not always applied: many searches drag on for weeks because the starting criteria are too broad or internally contradictory.

Once a property of interest has been identified, the buyer makes an offer. In Madrid, this is typically not formalised in writing at this stage — unlike other Anglo-Saxon markets — but negotiated verbally or by email between the parties or their representatives. Price, timescales and the conditions of the transaction are agreed before anything is signed. Only when the main terms are agreed does the process move to the arras deposit.

The analysis of the property must be done before signing the arras, not after. Once signed and the deposit handed over, the buyer will find it difficult to withdraw without losing the deposit amount. Due diligence — Land Registry verification, charges, planning status, community situation — must be conducted in parallel with the price negotiation, not as a subsequent step. For a precise understanding of what to verify, the guide on real estate due diligence in Spain covers this process in detail.

The arras contract: what it is and why it matters

The arras is the private contract that formalises the agreement between buyer and seller ahead of the notarial deed. It is the document that converts a verbal negotiation into a legally binding commitment for both parties.

The most common form in Spain is the arras penitenciales, regulated by Article 1454 of the Civil Code. The buyer hands over a sum — typically 10% of the purchase price — as a deposit. If the buyer withdraws, they forfeit that sum. If the seller withdraws, they are obliged to return double the deposit. This symmetry provides meaningful legal protection for both parties and is what makes the arras a practical and widely accepted instrument.

The arras contract must precisely set out the agreed price, the deadline for completing the public deed, any conditional clauses — for example, subject to obtaining mortgage financing — and the precise description of the property with its cadastral reference. A poorly drafted arras or one with ambiguous conditions is a source of subsequent disputes.

Taxes and costs: how much to budget

The costs associated with a property purchase in Madrid are known and predictable if calculated before signing. The common mistake is not having budgeted for them from the outset.

For resale (second-hand) property, the main tax is ITP — Impuesto de Transmisiones Patrimoniales — which in the Community of Madrid is 6% of the declared purchase price. This is one of the lowest rates in Spain. For new-build property, ITP is replaced by VAT at 10% plus Stamp Duty (AJD) at 0.75%.

On top of the applicable tax, budget for notary fees — typically €600 to €1,500 depending on the transaction value — Land Registry inscription fees — €400 to €1,000 — and legal costs if you are using independent legal advice, which is recommended: typically around 1% of the purchase price.

In total, costs and taxes for a resale property in Madrid typically amount to between 8% and 10% additional to the purchase price. For non-residents there are additional fiscal considerations covered in detail in the guide on how to buy a flat in Madrid as a non-resident.

The notarial deed and registration: the closing

The public deed of sale is the act by which the property formally changes hands. It is signed at a notary, with buyer and seller present — physically or represented by a duly notarised power of attorney. At that point, the remaining balance of the purchase price is transferred by bank transfer from a Spanish account.

The notary will verify the identity of both parties, the agreement between the signed terms and those of the arras contract, and the Land Registry and cadastral status of the property. Once the deed is signed, the Land Registry inscription process typically takes between one and four weeks depending on the workload of the registry.

At Aedara we coordinate the complete purchase process: search, negotiation, due diligence, coordination with the lawyer and notary through to signing. If you are looking for property in Madrid and want support throughout the process, tell us about your project.

References

Colegio de Notarios de España. (2026). Notarial fees and procedures.

Dirección General de Catastro. (2026). Cadastral values.

Banco de España. (2026). Mortgage regulation.