Costs and Taxes When Buying a Luxury Property in Madrid

Acquiring a luxury property in Madrid is not only about choosing the perfect home; it also requires a clear understanding of the costs and taxes involved. Being aware of them in advance is key to planning the investment properly and avoiding surprises. Madrid, beyond being an attractive and competitive market, offers a transparent and predictable fiscal framework, which provides security for both national and international buyers.

Transfer Tax (ITP)

For resale properties, buyers must pay the Transfer Tax (ITP), which in the Community of Madrid is set at 6% of the purchase price. This one-time tax, due after signing the deed, is one of the main costs to factor into the budget.

VAT and Stamp Duty (AJD)

For new-build properties, buyers are subject to VAT, charged at 10% of the purchase price, and Stamp Duty (AJD), set at 0.7% in Madrid. Both are payable at the time of acquisition and are unavoidable expenses for this type of purchase.

Notary and Registry Fees

The notarial deed and its registration in the Land Registry also involve additional costs. These usually range from 0.5% to 1% of the property’s value, depending on the price and complexity of the deed. Such costs are essential to ensure full legal security.

Professional Fees

In addition to official taxes and fees, buyers should also account for professional services:

• Lawyers or tax advisors, crucial for safeguarding the transaction and providing tax advice, particularly for international buyers.
• Real estate agency, which offers access to exclusive properties, negotiates on behalf of the buyer, and ensures a smooth, discreet process.

Municipal Capital Gains Tax

Although this tax is paid by the seller, it is important to be aware of the Municipal Capital Gains Tax (Plusvalía Municipal), calculated based on the length of ownership and the land’s increase in value.

Planning and Security

Overall, these additional costs generally amount to 10% to 12% of the purchase price. For luxury buyers, factoring this percentage into the budget is essential to assess the real cost of the investment.

At BARNES Madrid, we guide our international clients through all these aspects, providing clear, transparent advice on associated costs while ensuring the legal security of each transaction.

Purchasing a luxury property in Madrid is a strong and attractive investment, provided that the associated costs and taxes are fully understood. With careful planning and the support of experienced professionals, every acquisition can be carried out with complete confidence. With BARNES Madrid, the process becomes transparent, efficient, and designed to maximize the value of the investment in one of Europe’s most prestigious real estate markets.