As we explored in our 2026 Madrid Market Report, the capital is a high-velocity environment. But even if you have the "Searcher’s Mindset" and a winning offer, your transaction will fail if you haven't budgeted for the "12% Rule."
In Madrid, the sticker price on Idealista is never the final price. To secure a property, you must have the liquidity to cover taxes and professional fees that cannot be financed by a mortgage. Here is the exact breakdown of what you will pay.
1. The Big Tax: Resale vs. New Build
In Spain, the tax you pay depends entirely on whether you are the first person to live in the home.
The Resale Tax (ITP - 6%)
If you are buying a pre-owned home (the vast majority of central Madrid), you pay the Impuesto de Transmisiones Patrimoniales (ITP).
- The Rate: Madrid offers one of the lowest rates in Spain at a flat 6%.
The New Build Tax (IVA + IAJD - 10.75%)
If you are buying directly from a developer, you don't pay ITP. Instead, you pay:
- IVA (VAT): A flat 10% of the purchase price.
- IAJD (Stamp Duty): In Madrid, this is 0.75%.
2. Professional & Administrative Fees
Beyond taxes, you are paying for the legal safety of your transaction.
| Fee Item | Typical Cost | Who Pays? |
|---|---|---|
| Lawyer (Abogado) | 1% of price + VAT | Buyer |
| Notary Fees | €600 – €1,200 | Buyer |
| Land Registry | ~ €0.15% of the price | Buyer |
| Gestoría | €300 – €500 | Buyer |
| Valuation | €300 – €600 | Buyer |
Pro Tip: While a lawyer isn't legally mandatory in Spain, for a foreign buyer, they are essential. They check for "hidden" debts (IBI, community fees), and ensure the property is legally registered. Never sign a contract without one. It is a critical part of your due dilligence.
3. The Mortgage Costs
If you are financing your purchase, the 2019 Spanish Mortgage Law moved many costs to the bank. However, the buyer is still responsible for:
- Property Valuation (Tasación): This is a mandatory appraisal required by the bank. Cost: €300 – €600.
- Opening Fee: Most banks have abolished this, but some still charge 0% – 1% of the loan amount.
- The "Non-Resident" Premium: If you do not pay taxes in Spain, banks typically only lend 60–70% of the LTV, meaning your cash requirement increases significantly.
4. Special Tax Discounts (The "Remarkable" Savings)
Madrid offers specific incentives that can save you thousands if you qualify:
- Large Families: The ITP is reduced from 6% to 4% if the property becomes your primary residence.
- Young Buyers (< 35): There are ongoing discussions for 2026 regarding ITP reductions for first-time buyers under 35. Always ask your lawyer to check the latest Boletín Oficial for your specific date of purchase.
5. The Cash Requirement Summary
When you combine the 20-30% down payment with the ~12% in taxes and fees, your "Cash-on-Hand" requirement looks like this:
For a €400,000 Resale Apartment:
- Down Payment (25%): €100,000
- Taxes & Fees (12%): €48,000
- Total Liquid Cash Needed: €148,000
Final Thoughts
Budgeting 12% for a resale property or 16% for a new build ensures that your dream home in Madrid doesn’t come with a financial shock at the Notary's office.
Want to see exactly how these numbers look for your target property? Use our Madrid Purchase Cost Calculator or book a strategy call for a full fiscal review.