Madrid property: mortgage for non-residents, ITP of 6 % and how high the inheritance tax is
Not a holiday market but a city market. People who buy here buy to let, for their own professional presence or as an investment — and they meet the lowest property transfer tax of Spain's large regions.
Can a non-resident get a mortgage in Madrid?
Yes, non-residents can get a mortgage in Madrid, on the same benchmark as the rest of Spain: usually around 70% of the lower of purchase price and appraisal. What decides a case is whether an institution underwrites your income type, country of residence and property. The bank does not finance purchase costs and refurbishment, so they are equity.
Madrid property: how much of the price will a bank lend non-residents?
Madrid property can be financed for non-residents at around 70% of the lower of price and appraisal.
Non-residents in Madrid: around 70% of the lower of price and appraisal: The same benchmark as the rest of Spain: around 70% of the lower of purchase price and appraisal. What decides it is whether an institution underwrites your income type, country of residence and property.
Why is Madrid cheaper for tax? ITP 6% on purchase — the lowest of the large regions (Murcia 7.75%, Comunitat Valenciana 9%, Catalonia 10%). On parent–child inheritance: 99% relief. Inheritance and gift tax.
A city apartment is the easier security: A property usable all year in a liquid market is easier security than a seasonal holiday home.
Three financings a branch office cannot do: Spanish banks pay out new builds only on completion, they finance purchases rather than capital release, and they cannot value a German property. Of the 30+ institutions on the market, one underwrites the builder instalments during construction and two lend against unencumbered existing property (Perini market check).
Buying an apartment in Madrid: why is a city flat simpler security for the bank?
Madrid is not a holiday market but a city market, and from the bank's point of view that is rather an advantage: a property usable all year round in a liquid market is simpler security than a remote holiday home.
What matters is not the location but whether an institution will underwrite the specific combination of type of income, country of residence and property. For self-employed people, Spanish banks regularly require three years of records. For tax purposes Madrid is the most favourable of the large regions: ITP 6 % on a resale, AJD 0.75 % on a new build. The bank does not finance additional costs and modernisation; they are equity and must be calculated before the commitment.
Why is Madrid the exception among our regions?
Unlike the coast, Madrid has no seasonal holiday market — the bank sees a property usable all year in a liquid market. These are the districts buyers look at:
- Salamanca, Chamberí, Retiro, Centro: The sought-after central districts. The stock is largely period blocks; state of refurbishment and the presence of a lift both feed into the bank's valuation.
- Chamartín and the Castellana axis: Office and residential locations along the north-south axis, well connected to the airport and the main stations. The typical setting for a professionally motivated second home.
- The north-western commuter belt: Pozuelo, Majadahonda, Las Rozas and Boadilla — family housing with international schools. This is the part of the market that concerns families.
The hurdle is not the property but the buyer's non-resident status.
Buying a house in Madrid: which three financing cases do bank branches fail on?
Spanish banks pay out for a new build only at construction completion, they finance purchases and not capital release, and they cannot value a German property. Of the 30+ institutions on the market, one underwrites the construction instalments during the build and two underwrite lending against unencumbered existing property (Perini market check).
Which ITP and AJD rates make Madrid the cheapest of the large regions?
Madrid charges ITP of 6 % on resale property and AJD of 0.75 % on new build from a developer, on top of 10 % VAT. The 10 % rebate on the tax due does not apply here.
- ITP 6 % on resale property — art. 28 of Decreto Legislativo 1/2010 of the Comunidad de Madrid, cut from 7 % to 6 % by Ley 5/2024. The taxable base is the higher of purchase price and cadastral reference value.
- AJD 0.75 % on new build from a developer, on top of 10 % VAT. That too is among the lowest rates in Spain.
- The 10 % rebate on the tax due does not apply here. It requires a main residence and a value of up to €250,000 — neither fits the typical non-resident purchase.
Tax rates change.
How is an apartment as a second home at €1.68m financed?
A self-employed architect and his wife, resident in Germany at the time of purchase, are looking for a generous apartment for professional stays. Before moving in, the kitchen, lighting, air conditioning and a work area are to be renewed.
The hurdle: not the property. An apartment in Chamartín is straightforward security from a lender's point of view. The difficulty lay in the self-employment — Spanish banks regularly ask self-employed non-residents for three years of records and calculate more conservatively than for employees. Cases like this are decided by the choice of institution, not by credit standing.
Model calculation — borrowing rate 2.4 % fixed, 20 years, fully amortising: Purchase price — Amount: €1,680,000. Purchase costs, around 8.5 % (of which ITP 6 % = €100,800) — Amount: €143,000. Refurbishment — Amount: €95,000. Total investment — Amount: €1,918,000.
Loan, 65 % of the purchase price — Amount: €1,092,000. Equity — Amount: €826,000. Monthly instalment at 2.4 % — Amount: €5,733.49. Without the discount, at 3.4 % — Amount: €6,277.19 — around €6,520 more per year.
One point that is easily missed: the Spanish bank does not finance purchase costs or refurbishment — it lends against the lower of price and appraisal. That does not mean they have to be paid in cash: anyone holding unencumbered property in Germany can cover exactly these items through a German top-up loan. What matters is that both are costed before the offer — a follow-up financing is the step that most often fails for non-residents.
Model calculation, not a case report. Fully amortising loan, no residual debt. Figures rounded, purchase-cost ratio given as a range.
Representative example under § 17 PAngV: €200,000 loan, 70 % loan-to-value, 20 years, borrowing rate 2.4 % fixed, APR 2.45 %, instalment €1,050.09, total amount €252,022 (valuation €400, no arrangement fee; the borrowing rate shown applies with the bonificación, which requires two to four bundled products, depending on the bank, whose running costs are not included in the APR). Conditions as of 06.10.2026, not an offer.
How can you use a property in Madrid as a source of capital?
Madrid is an autonomous community in its own right; its rules apply to any property located here, wherever the owner lives. A paid-off property in Madrid does not have to be sold to free up capital — it can be mortgaged instead.
Inheritance tax, Comunidad de Madrid: 99% relief, since 2007 — groups I and II, meaning parents, children and spouses (art. 25.2 Decreto Legislativo 1/2010 (Madrid)).
For inheritance, the rules of the autonomous community holding the highest value of the Spanish estate apply. With a single Spanish property that is simply its region. The relief must be claimed within the filing deadline — miss it and it becomes contentious.
How far a Spanish bank will go on an unencumbered property, what changes with the owner's age, and what the released money may be used for is set out in full under releasing capital from a Spanish property.
A gift of the released money to a child is taxed in Germany, not in Spain — see inheritance and gift tax in Spain. Scope: inheritance tax, groups I and II (parents, children, spouses). Regional tax law changes regularly.
In the first quarter of 2026 the prices paid ran 29 per cent below asking prices, the widest gap since 2007. For a mortgage that is the figure that counts: the bank's valuer works from completed sales, not from listings. → Portal Estadístico del Notariado · What that means for your financing · Where the numbers come from
Inheritance tax in Madrid: what owners should know: On parent–child inheritance Madrid grants 99 % relief. Details: inheritance and gift tax in Spain.
What was really paid in this area. Prices on property portals are sellers' asking prices. What was recorded before a notary is published by the Spanish notaries' association itself: in the Portal Estadístico del Notariado, free of charge, without registration and available down to postcode level. In the first quarter of 2026 the prices paid were 29 percent below asking prices, the largest gap since 2007. For financing this is the figure that counts: the bank's valuation company works with completed purchase contracts, not with listings.
Further reading
Inheritance & gifts
Why it is usually the German allowance that sets the limit, not the Spanish rate.
Lending against an existing property
Releasing capital from a Spanish property that has been paid off.
Madrid: why must even the lowest of the named rates come from equity?
The Comunidad de Madrid levies the ITP at 6 %, which puts it below Andalusia and below the upper bands of the regions with sliding scales. The advantage is real, but it changes only the amount, not the classification: in Madrid too, the acquisition tax is not part of the financing but equity. The same applies to notary, Registro and Tasación.
For non-residents a second point is relevant in Madrid: the market is predominantly a market of existing properties with high demand, and sellers expect short deadlines. Anyone who starts the financing only after the preliminary contract is working against a deadline they have set themselves, and the Spanish credit check cannot be speeded up.
Frequently asked questions
Can I get a mortgage in Madrid as a non-resident?
Yes. Madrid is assessed on the same benchmark as the rest of Spain — around 70 % of whichever is lower, purchase price or appraisal. The city itself is not what decides the case; what decides it is whether an institution underwrites your combination of income type, country of residence and property.
Why is Madrid cheaper than the coastal regions?
On purchase: ITP 6 % against 7.75 % in Murcia, 9 % in the Comunitat Valenciana and 10 % in Catalonia. On inheritance between parents and children: 99 % relief, so effectively no Spanish tax.
Is a city apartment worse security than a holiday home?
The opposite. A property usable all year in a liquid market is the easier security. Banks lend more cautiously against properties with limited resale prospects — remote locations, unusual builds, rústico land.
Can I release capital from a Madrid property I already own outright?
Yes, usually up to around 50 % of the appraised value, and only if the property is unencumbered. The funds must be used in Spain.
How long does financing take?
A written offer inside ten days is realistic. What sets the pace is rarely the bank — it is getting the NIE, opening the Spanish account and securing a notary slot.
Request a mortgage
Planning a purchase in Madrid, or looking to release capital from property you already own there? A first consultation without obligation — in English, German, French, Spanish or Russian.
These figures are as of July 2026. This is not legal or tax advice, so your case belongs with a tax adviser.
Related pages
Inheritance & gift tax
Why the German allowance is usually the real constraint, not the Spanish rate.
See the three structures
Special financing in Spain: stage payments during construction, capital from a paid-off Spanish property, German security, equity raised at home.
Calculate purchase costs
Spanish mortgage calculator for non-residents: monthly payment, loan amount, purchase costs and equity required — free, instant, full breakdown by email.
Murcia property: what transfer tax do non-residents pay on the Costa Cálida?
The taxable base is the higher of purchase price and cadastral reference value. The reduced rates of 3% and 5% are not open to non-residents.
Content by Siegfried Perini — local brand representative since 2019, active in real estate since 1992, entered in the German intermediary register (§ 11a GewO) as a person directly involved in brokerage and advice. Point of contact for German-speaking buyers in Spain and Portugal. Brokerage by Olga Nikushkina, mortgage credit intermediary under § 34i German Trade Regulation (GewO); in Portugal through a locally licensed intermediary.