Buying a home to renovate in Madrid: a step-by-step guide to the process

Buying a luxury home in Madrid while resident in another country is simpler than it seems, but it is worth knowing the steps and surrounding yourself with the right professionals. This guide summarises the process so you have a clear picture before making any decision.

Legal framework: can a foreigner buy in Spain?

Any individual or company, whatever their nationality, can acquire real estate in Spain. The only prior requirement is to obtain the NIE (Foreigner Identification Number), which is arranged at the Spanish consulate in the country of residence or in Spain through a legal representative. The usual timeframe is two to four weeks.

The buying process, step by step

1. Reservation and negotiation. After identifying the home, price and terms are negotiated. It is common to formalise a reservation with a 1% deposit that takes the property off the market while the legal team reviews the documentation.
2. Deposit contract (arras). Once the legal review is complete, the deposit contract is signed —usually 10% of the price, less the reservation— which binds both parties and sets the deadline for the deed.
3. Deed and handover. The purchase is formalised before a Spanish notary (power of attorney may be granted to a representative). After signing and the remaining payment, the deed is registered at the Land Registry and the keys are handed over.

Taxes: what you should know

When buying a second-hand home in the Region of Madrid, the main tax is ITP (Property Transfer Tax), currently 6% of the price. Afterwards, the owner pays the annual IBI (property tax). Compared with markets such as the United States, Spain concentrates more of the tax burden at the moment of purchase, but with a significantly more moderate recurring annual cost: an interesting profile for the long-term wealth-focused buyer.

Financing

Spanish banks offer mortgages to non-residents who meet the risk criteria, usually between 60% and 70% of the appraised value, with more competitive rates than in the US or Latin America. We connect our clients with private-banking advisers who negotiate the best terms for each profile.

Why Madrid?

Madrid's prime segment has recorded average annual appreciation of over 5% in the last five years, with neighbourhoods such as Salamanca and Justicia among those growing the most. Add to this a high quality of life, legal certainty within the European Union, excellent connectivity and a price level that, compared with London, Paris or Zurich, still has room to grow.

This information is for guidance only and does not constitute legal or tax advice. Always consult a professional.

Are you thinking of buying to renovate in Madrid? Let's talk about your project.