How to buy property in Madrid: a step-by-step guide

Sunny Spain with its cosy coastlines, temperamental culture and high quality of life is ideal for relocation. The opportunity to live by the sea and enjoy the mild climate attracts thousands of people every year. But realising this dream is not easy: you need to understand the legal nuances, research the cost of living and choose the best way to relocate. To understand how to move to Spain for permanent residence, it is important to prepare a clear plan, take into account all aspects and comply with the legal requirements of the country.

Moving to Spain: how to choose the best way to move to Spain

It is important to choose the appropriate way to obtain residency status. The government offers several legalisation options, each with its own advantages and limitations. The answer to the question of how to move to Spain for permanent residence depends on the applicant’s goals, income level and life circumstances.

The main ways of obtaining a residence permit:

1. Work visa. This option is suitable for those who have received an offer of employment from a Spanish company. It is important that the employer makes the appropriate application to the migration authorities. It is also possible to travel independently through starting a business.
2. Investment visa (golden visa). Investment in the Spanish economy entitles you to a residence permit. The minimum investment amount is 500,000 euros, e.g. in the purchase of property.
3. Family reunification. If relatives are already legally residing in the country, it is possible to apply for reunification. This requires proof of financial independence and availability of accommodation.
4. Study residence permit. Students receive a temporary residence permit for the period of their studies. This status allows you to work up to 20 hours per week, and after completing your studies you can apply for a work visa.
5. Retirement IOU. Pensioners with sufficient means of living and health insurance can also obtain a residence permit.

How to get a residence permit in Spain: steps and documents

Obtaining permanent residence is the final stage, which requires fulfilment of several mandatory conditions. In order to understand how to move to Spain for permanent residence, it is necessary to take into account that the process takes at least five years and involves the fulfilment of a number of formalities:

1. Residence in Spain for at least five years. During this period, it is necessary to maintain residency status and comply with migration regulations.
2. Document preparation. The list includes income certificates, tax returns, health insurance and proof of stable financial situation.
3. Language proficiency. A B2 or higher Spanish language proficiency certificate is required for application.
4. Integration. Demonstrating social engagement, participation in local activities and knowledge of the country’s culture will help to get a favourable decision.

The application is accompanied by a thorough review of all documents submitted. After successful completion of the stages, the applicant is given the opportunity to reside legally on the peninsula on a permanent basis.

Cost of living in Spain: what to consider when moving to Spain

Financial preparation plays an important role in the relocation process:

1. Housing. Renting a flat in the centre of Barcelona or Madrid will cost an average of 1000-1500 euros per month. More affordable options can be found in Valencia (700-900 euros). Buying real estate is also popular among those moving: the average price per square metre in the capital is about 4000 euros.
2. Nutrition. Products in Spain are relatively inexpensive. The cost of a set of meat, vegetables, bread and milk is about 120-150 euros per person. Outside the house, prices are much higher: lunch in a restaurant costs 15-30 euros.
3. Transport. Metro and bus fares cost 1.5-2 euros. For motorists, petrol costs approximately €1.5 per litre, and parking in city centres reaches €2 per hour.
4. Health care. Public clinics provide services on the basis of insurance, the payment for which depends on income. Private policies cost between 50 and 150 euros per month and offer a wider range of services.

Taxes in Spain: what is important to know before you move to live in Spain

The state’s financial system is based on progressive taxation, which applies to both local residents and foreign nationals living in the country for more than 183 days a year. For those planning to move to Spain for permanent residence, it is important to understand the structure of taxes, their rates and ways to optimise expenses.

Personal income tax

The IRPF rate ranges from 19% to 47% depending on the level of earnings. For example:

1. Income up to €12,450 is taxed at a rate of 19%.
2. Income between 20,200-35,200 euros – 30 per cent.
3. For high incomes over €60,000, the rate reaches 47 per cent.

Foreigners with an investment visa or temporary residence permit who do not spend more than six months on the peninsula can benefit from non-resident tax status and pay a flat rate of 24%.

Property tax

Homeowners pay an annual IBI (Impuesto sobre Bienes Inmuebles) tax. Its rate is 0.4-1.1% of the cadastral value of the property. For landlords, there is an additional commission on rental income.

VAT and capital taxes

Spain applies a standard VAT of 21%, with reduced rates (10% and 4%) for certain goods and services. Capital gains tax (IRNR) is levied on the sale of real estate and ranges from 19% to 23%.

The best regions in Spain: where to move for permanent residence

The choice of where to live plays a key role in adaptation and quality of life. The country offers a variety of locations, each with its own characteristics, climatic conditions and costs:

1. Barcelona. A cosmopolitan metropolis with developed infrastructure, international schools and many cultural events. The average cost of renting a home is 1200-1500 euros, and buying a flat will cost around 4000 euros per square metre. Barcelona is suitable for those who appreciate the urban rhythm of life and proximity to the sea.
2. Madrid. The capital of Spain is the business and cultural centre of the country. The best universities and offices of the largest companies are located here. The average rent is 1000-1400 euros per month. Madrid is chosen by those looking for career opportunities and a high level of comfort.
3. Valencia. A city on the Mediterranean coast with more affordable prices. Renting a flat costs 700-900 euros, and property prices are lower than in Barcelona or Madrid. Valencia attracts with its warm climate, developed infrastructure and moderate rhythm of life.
4. Andalucía. A southern region with a mild climate, historical sites and affordable housing. Seville and Malaga are popular destinations for those who appreciate traditional Spanish culture and low costs.

The challenges of moving: what to consider

To understand how to move to Spain for permanent residence, it is important to consider the following aspects:

1. Spanish bureaucracy is known for its slowness. It can take several months to apply for a visa, residence permit or permanent residence permit. Planning and utilising the services of immigration specialists can help to shorten the timeframe.
2. Knowledge of Spanish plays a key role in integration. In big cities you can find an English-speaking community, but in smaller communities it will be difficult without this skill.
3. High housing costs and taxes can be a barrier for many. Financial planning and searching for more affordable regions can help optimise costs.
4. Moving to another country is accompanied by the need to adapt to the local culture and way of life. The Spanish value family values, siesta and a relaxed attitude to work, which may surprise new residents.

Results

How to move to Spain for permanent residence? It is necessary to choose the best way to obtain a residence permit, prepare documents, calculate the budget and decide on the region. The country offers a lot of opportunities for a quality life, but success depends on careful preparation and adaptation to local conditions.

Buying property in the Kingdom is a serious investment, but the costs do not end there. Many people face an unexpected financial burden, because the taxation system depends on many factors: region, type of property, status of the owner. Taxes for property owners in Spain include one-time payments at purchase, annual fees and special charges, which can vary greatly even in neighbouring provinces.

In Spain, there are fees that owners learn about after the transaction. For example, the luxury tax applied to expensive property, or increased rates for non-residents. Ignorance of the intricacies of the fiscal system can lead to overpayments or even fines for late filing of declarations. Let’s find out what contributions property owners have to pay in the Kingdom, how they are calculated and whether they can be optimised.

Tax for future owners – on the purchase of property in Spain

Buying a property is not only a major investment, but also a compulsory fiscal contribution that depends directly on the region, the type of housing and the legal status of the buyer. In Spain, the tax system is organised in such a way that the purchase of a home is accompanied by different types of fees. Therefore, understanding the obligations in advance helps to avoid unexpected costs.

Varieties of purchase taxes:

• new build (purchase from a property developer) – subject to VAT (IVA), the rate of which is 10% of the value of the property. This is a fixed fee that applies throughout Spain.
• Secondary property – subject to ITP tax (Impuesto sobre Transmisiones Patrimoniales), the rate of which depends on the region and varies between 6-10%.

How tax is calculated

The amount of tax payments depends on the region. For example:

1. In Catalonia, the ITP rate is 10%, which means that if you buy a flat worth €400,000 the fee will be €40,000.
2. In Madrid it is lower at 6%, the tax for the same value of the property would be 24,000 €.
3. In Andalusia, the fiscal multiplier can be as high as 8 per cent, in Valencia 10 per cent.

The regional distinction makes the choice of purchase location a strategic point: buying a home in one region can result in significant tax savings. It is important to take into account: if the purchase is made through a legal entity, the rate may differ.

What else is important to know about property purchase tax in Spain

1. The tax is payable in a single instalment at the time of the transaction. After the tax is paid, the buyer is able to register the property.
2. Late payment can result in penalties and additional interest.
3. Documents confirming the payment of the fee should be kept, as the fiscal authorities may request them in the event of an audit.
4. The tax is the same for residents and non-residents: it does not matter whether the buyer is a Spanish citizen.

Consequently, the purchase levy is an unavoidable expense that must be considered when planning your budget. Ignorance of the nuances can lead to unexpected expenses, so it is important to clarify in advance the rates in the desired region.

Property taxes for non-residents in Spain

Non-local property owners face additional taxation. The main one is IRNR, levied on income derived from property (from renting out).

Tax difference:

• residents pay income tax (IRPF) on a progressive scale (from 19% to 45%);
• non-residents from the EU pay a fixed IRNR tax Spain – 19%;
• non-residents from other countries pay 24%.

Example: if a flat is rented for 1000 € per month, the tax will be 190 € for EU residents and 240 € for others.

Ignoring taxation risks penalties. Spanish fiscal authorities actively monitor property owners through bank transactions and rental contracts.

How much to pay when buying a second-hand car

The purchase of secondary property in Spain is accompanied by the mandatory payment of ITP tax by the future owner. This is a charge levied on the buyer who purchases a home from a private individual rather than a property developer. Unlike a new flat or villa, where VAT of 10% is applied, secondary market apartments are subject to a duty, the percentage of which varies from region to region.

Average ITP rates by region:

1. Catalonia, Valencia – 10%.
2. Madrid – 6%.
3. Andalusia – 8%.
4. Galicia – 9%.
5. Balearic Islands – 8 per cent.

How tax is calculated for property owners in Spain

Let’s say a buyer buys a flat for 300,000 € in Catalonia. At a rate of 10%, the fee would be 30,000 €. In Madrid, with a fiscal rate of 6%, the fee would be €18,000. The difference in tax burden between regions can reach tens of thousands of euros, so when buying it is important to consider not only the value of the property, but also the tax liability.

What you need to know about ITP payment

Four factors:

1. The tax is payable within 30 days of signing the sales contract.
2. Delinquency threatens fines and penalties that increase over time.
3. The contribution is calculated not only from the value in the contract, but also from the cadastral valuation, if it is higher. The fiscal authorities may carry out an audit and assess the difference.
4. The ITP in Spain is paid to the regional tax office where the property is located.

The amount of taxation can have a significant impact on the final value of a property. Buyers who plan to purchase a home in different regions should consider the fiscal rate and the possibility of additional costs when making calculations.

Conclusion

Taxes for property owners in Spain are a complex system involving one-off and regular payments. Understanding your tax obligations can help you avoid penalties and unnecessary expenses.

Key Findings:

• When buying a home, you need to consider not only the price, but also the tax burden;
• for non-residents the coefficient is higher, especially for renting;
• it is important to ensure that the fee is paid on time to avoid penalties.

Spain is a country with a developed tax system, its nuances should be taken into account at the stage of buying a property. Awareness is the main tool for minimising costs and avoiding unpleasant surprises.