Buying in Madrid vs the US: costs and taxes

Spain will sell you a piso in Chamberí without asking about your passport. The bill comes from the transfer tax, and later from two tax offices that both care about your gain.

The short version

Americans can buy in Madrid on the same terms as Spaniards. You need an NIE (foreigner tax number), not a residence permit.
Resale homes in the Madrid region pay 6% transfer tax (ITP), with a small discount on a main home up to EUR 250,000. New builds pay 10% VAT plus a stamp duty instead [1].
Spain taxes a gain on sale at 19% to 30% for residents, but a main home can be exempt if you reinvest or you're over 65 [2].
The IRS taxes your worldwide gain too. Section 121 shelters up to USD 250,000 (USD 500,000 joint) on a main home, foreign or not, and Spanish income tax on the gain can be credited [3][4].
Your old house in DC keeps its exclusion only while you pass the 2-of-5-years test [3].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (USD 1.1163 per euro), rounded.

Can Americans buy in Madrid?

Yes. Spain has no foreign-buyer approval, quota or surcharge for homes in Madrid. A US citizen on a non-lucrative visa, a digital nomad visa or no Spanish visa at all can sign a deed in Salamanca or Lavapiés. Spain closed its golden visa route for property buyers in April 2025, so a purchase no longer gets you residency on its own.

The process looks different from a closing back home:

Get your NIE. You can't sign at the notary or open a Spanish account for the purchase without it. Our guide to the NIE and TIE covers how.
The reservation and arras. You usually pay a small reservation, then sign a private deposit contract (contrato de arras), often around 10% of the price. Walk away and you lose it; if the seller walks, they typically pay you double.
Check the title. Get a nota simple from the Registro de la Propiedad to see who owns it and what debts sit on it. There's no title insurance in the American sense; the registry and the notary do that job.
Sign at the notary. The notary reads the deed (escritura) and checks IDs and payment. Then the deed goes to the land registry and the tax is paid within the regional deadline.
Check the building. Ask the comunidad de propietarios for its minutes, fees and planned work. Older Madrid buildings sometimes need elevator or facade projects that owners pay for.

Getting a loan: Spanish bank or US lender?

In Madrid. Spanish banks lend to foreign residents with Spanish income, a residence card and a clean bank history. They tend to lend less to non-residents, and they expect you to pay the taxes and fees in cash. Fixed, variable and mixed-rate mortgages are all common; ask for the binding offer (FEIN) and the notary's free pre-signing review, which Spanish law gives every borrower.

Back home. Some Americans borrow against a US home, or use US savings, and buy in cash. Qualifying for a US loan on foreign income is harder than it sounds. Our guide to US mortgages for Americans living abroad covers what lenders want.

The currency trap. The IRS measures a euro mortgage in dollars. If the euro weakens while you owe it, paying the loan off can create a taxable US currency gain even though you repaid exactly what you borrowed, and a currency loss on a personal home loan usually isn't deductible. Our guide to currency gains on a foreign mortgage walks through it.

Costs side by side

Rates as of November 2026.

	Madrid	Washington, DC (the US example)
Can you buy?	Yes, no restrictions on Americans; NIE needed	Yes
Transfer tax on a resale home	ITP 6% of the price or the Catastro reference value, whichever is higher; a 10% discount (5.4% effective) on a main home up to EUR 250,000 [1]	Deed recordation tax and deed transfer tax: each 1.1% under USD 400,000 and 1.45% at USD 400,000 or more, on the whole price [5]
New build	10% VAT plus 0.75% stamp duty (AJD) on most homes [1]	Same DC taxes
Notary and registry	Fixed official fee scales; together usually well under 1% on a typical apartment	Settlement, title insurance and recording fees
Agent fees	Usually paid by the seller, commission negotiable	Usually paid by the seller, commission negotiable
Annual property tax	IBI, set by the city council on the cadastral value; often modest compared with a US bill	DC real property tax with a homestead deduction for your main home
Tax on selling your home	Plusvalía municipal (city tax on land value), plus income tax on the gain unless an exemption applies [2]	Federal and DC income tax after Section 121
US tax on the gain	Yes, worldwide, in dollars; Section 121 and the foreign tax credit can help [3][4]	Yes; Section 121 if you pass 2 of 5 years [3]

Illustration only. A EUR 400,000 resale apartment (about USD 446,500) pays EUR 24,000 in ITP (about USD 26,800) [1]. A DC home at the same dollar price pays 1.45% recordation tax and 1.45% transfer tax, about USD 6,500 each, with who pays which set in the contract [5]. Madrid's tax bite on the buyer is much bigger; budget about 7% to 8% of the price for tax, notary, registry and the gestoría that files it all.

Tax when you sell

The Spanish side

Once you're a Spanish tax resident, a gain on a home sale goes into your "savings" income. For 2026 the rates are 19% on the first EUR 6,000, then 21%, 23%, 27% and 30% on savings income above EUR 300,000 [2]. Two main exits:

Reinvestment. If the home was your main residence for at least three years and you put the proceeds into a new main home within two years, the gain is exempt (partly, if you reinvest only part) [2].
Over 65. Sell your main home after 65 and the Spanish gain is exempt with no reinvestment needed [2].

The city also charges plusvalía municipal on the rise in land value, and it applies even when the income tax is exempt [2]. Leave Spain and sell later as a non-resident and the rules change: a single non-resident rate applies and the buyer withholds part of the price as a down payment on your tax. Our guide to Spanish taxes for Americans has more.

The US side

Uncle Sam taxes your worldwide gain, measured in dollars:

Section 121 doesn't care where the house is. Own it and live in it for at least 24 months of the 5 years before the sale, and up to USD 250,000 of gain (USD 500,000 for most joint filers) is excluded. You generally can't use it twice within two years [3].
Spain's reinvestment break has no US twin. Roll a big Madrid gain into a new Madrid home and Spain may charge nothing, but the IRS taxes anything above the Section 121 limit.
The foreign tax credit. Spanish income tax on the gain goes on Form 1116 against US tax on the same gain [4]. Plusvalía municipal and ITP are generally not income taxes, so don't count on crediting them.
Currency counts. Your dollar cost uses the rate when you bought and your proceeds use the rate when you sell. A stronger euro can create a US gain on an apartment you sold for what you paid.

Your old house in DC

The 2-of-5-years clock keeps ticking after you move. Once you've been gone more than three years, the exclusion is usually lost, and depreciation from renting it out is taxed on sale even when the rest is excluded [6]. DC can tax the gain on DC property too. Our guide to selling your US home after moving abroad has the details.

Renting it out

The Spanish side. As a resident, you report rent on your Spanish return and deduct interest, community fees, IBI, repairs and building depreciation. Spain gives a reduction on net rent from long-term housing leases, and Madrid regulates tourist rentals separately; a short-term rental needs its own license from the region and the city. If you leave Spain and keep renting it out, non-resident rental tax applies with fewer deductions.

The US side. Report the rent on Schedule E. A Madrid apartment is used predominantly outside the United States, so you must depreciate it under the Alternative Depreciation System (ADS) over 30 years for property placed in service after 2017, not the 27.5 years a DC rental gets [7][8]. Spanish income tax on the rent can go on Form 1116 [4].

If the rental is your place back in DC, our guide to rental income from a US property covers the stateside side.

Which makes sense for whom

Staying long term. Madrid can make sense if you plan to be here at least five to seven years, enough to earn back the 6% ITP and fees. Live in it two of the five years before you sell and Section 121 usually covers ordinary gains.
Retiring in Spain. Spain's over-65 exemption plus Section 121 makes selling a main home late in life fairly gentle on both sides. Plan the estate, though: Spain taxes the heirs and the US taxes the estate. See wills and estate planning across two countries.
Moving back in a few years. Renting in Madrid and keeping (or buying) stateside is usually the safer bet. The purchase costs take years to recoup, and a euro swing can eat a modest gain.
Buying to rent out. Run both sets of numbers. The IRS wants 30-year depreciation and recaptures it when you sell.

A US expat tax preparer (or a Spanish tax adviser) can check your situation before you sign at the notary. Swap notes with other buyers in our community group for Americans in Spain at /join/.

Buying in Madrid vs back home: what Americans really pay