Money from abroad to buy a flat in Madrid: gift or loan?

The question these buyers ask me most is whether it is better for the family to "give" the money or to "lend" it. Both are legal and both can work well, but they have different tax consequences and requirements that must be met before the money moves, not afterwards.

First: make sure the money arrives with a trail

Whether it is a gift or a loan, it must be possible to follow the money from its origin to the purchase:

• Bank transfer from an account in the name of the person giving or lending the money to your own account in Spain. Avoid cash, intermediaries and third-party accounts.
• Document where it comes from. Under anti-money-laundering rules, the bank will ask for documents explaining the source of the funds (savings, sale of a property, salary) and your relationship with the sender. A large international transfer can be held for a few days while it is checked.
• The notary checks it too. The purchase deed identifies the means of payment, so the whole path of the money should be documented.
• Do not bring cash. Entering or leaving Spain with €10,000 or more in cash must be declared, and you would still have to justify its origin to the bank.
• Factor in the exchange rate and fees if the money comes in another currency, and leave a margin: do not leave the transfer for the week of the signing.

Option 1: a gift

If your family gives you the money, in Spain it is a gift and it is taxed under Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones), paid by the person who receives it. If you live in the Madrid region, its rules apply, and they are among the most favourable:

• Parents, children, grandparents, grandchildren and spouse (groups I and II): 99% reduction of the tax.
• Siblings, uncles and aunts, nephews and nieces, and in-laws (group III): 50% reduction for gifts made from 1 July 2025.
• Cousins, friends or unregistered partners: no reduction for kinship.

The reduction is not automatic. To apply it, the gift must be made in a public deed before a notary and, for money, the deed must state where it comes from. The tax return must then be filed on time (thirty working days from the gift), even if very little is payable. If the donor lives abroad, they can sign before the Spanish consul or before a notary in their country with an apostille.

Two important warnings:

• If you have only just moved to Madrid, the Madrid rules may not apply: for money, what counts is where you have lived for most of the previous five years. If you do not meet this, the state rules would apply, which are much less favourable.
• The donor's country may also tax the gift. Before transferring, check its rules and whether there is a tax treaty.

Option 2: a family loan

If your family wants the money back, or a gift does not make sense (for example, because no reduction applies in your case), a loan is the alternative. To prevent the tax office from treating it as a disguised gift:

• A written contract stating the amount, the term and the repayment schedule, and whether interest is charged (if not, say so expressly).
• File it with the Madrid tax office using form 600 within the deadline: the loan is exempt from tax, but filing it dates the contract and proves it exists.
• Actually repay it, by bank transfer and following the schedule. Without repayments, the tax office can treat it as a gift, with surcharges.
• If interest is charged, it is income for the lender and is taxed according to their country of residence.

Bear in mind that, if you also take out a mortgage, the bank may count the repayments of that family loan when calculating how much it can lend you.

So, which is better?

• If your parents or grandparents are helping you and you have lived in Madrid for years, a gift in a public deed, with the origin of the money documented, is usually the simplest option and has almost no tax cost.
• If siblings, uncles or aunts are helping you, compare: the gift has a 50% reduction and the loan is not taxed if it is repaid.
• If you have just arrived in Spain or do not live here, study your case before moving the money: the answer can change completely.
• Never: cash, transfers from third-party accounts or a private "paper" signed at the last minute.

How I can help

I act only for buyers. Before the money moves, I tell you which option fits your case, which documents you will need and how to coordinate it with the bank and the notary, so the purchase is not delayed at the last minute. I also check the property and the deposit contract and negotiate the price for you.

If you are buying from abroad, see also buying property in Madrid as a foreigner, how to get a NIE and the costs of buying a flat in Madrid. And if you want us to look at your case, the first consultation is free.

General information updated in October 2026. Each case depends on your residence, the family relationship and the country the money comes from.