Financing DE or Spain

Financing in Germany or Spain: which suits your purchase?

If you buy a property in Mallorca, you can either mortgage a German property to fund it or take out a Spanish mortgage on the property you're buying. The calculator compares the loan-to-value range, the costs of registering the security, the model interest rates and the effect on Spanish wealth tax (Impuesto sobre el Patrimonio) in separate blocks. For tax deductibility of the debt, what matters is the documented use of the loan capital; the location of the security alone does not make one route more advantageous.

How it's calculated

With the German route, you secure the loan with a Grundschuld (land charge): a right entered in the German land register from which the bank can satisfy itself from the German property if repayment fails. You use the money to fund the purchase in Spain. With the Spanish route, the property you're buying serves as the mortgage security.

Loan-to-value range: does the security support your loan?

German headroom = property value × bank's loan-to-value limit − existing remaining debt. Negative results are capped at zero. The loan-to-value limit is the financeable share of the property value set by your bank, not a statutory rate.

Spanish range = lower of purchase price and appraised value × bank's loan-to-value limit. The appraised value comes from the Tasación, the valuation report required for Spanish property financing. This formula is a conservative starting assumption. A registered maximum loan amount from a bank offer supersedes the estimate.

If a range is not sufficient for your financing needs, the calculator shows the coverage shortfall and suppresses the cost and tax results for that route. A sufficient range is not yet a loan commitment: your bank will still check income, existing liabilities, ranking in the land register and the security.

Costs of registering the security in the base case

The German calculation follows the Court and Notary Costs Act (GNotKG). The starting point is the Geschäftswert (transaction value), i.e. the sum of money on which the fees are calculated: for a Grundschuld, under § 53 Abs. 1 GNotKG this is its nominal amount, the security amount stated in the deed. This can differ from the loan amount actually paid out.

The full fee is derived from Table B, a stepped scale: within each value band it increases by a fixed amount for every additional sum begun; when the value band changes, the increment and step size change too. The provision is set out in § 34 GNotKG, and the calculator shows the table amount. The general minimum fee amount is €15.

The notarisation (Beurkundung) is the notarial procedure in which your declaration is legally explained and recorded in a deed. In the base case, the related declarations for setting up the Grundschuld form a single combined notarisation subject. For this, the calculator computes:

• Notary fee: Table fee × 1, at least €60, according to KV 21200. KV refers to the fee schedule (Kostenverzeichnis) of the GNotKG.
• Flat-rate allowance for postage and telecommunications: 20% of the notary fee, capped at €20, according to KV 32005.
• VAT: 19% on the notary fee and the flat-rate allowance, according to KV 32014 in conjunction with § 12 para. 1 UStG.
• Land registry fee: Table fee × 1 for the Buchgrundschuld according to KV 14121. This is entered without an additional land charge certificate. For the Briefgrundschuld, for which an additional land charge certificate is issued, the factor 1.3 applies instead, according to KV 14120.

German security costs = notary fee + flat-rate allowance + VAT on these notary costs + land registry fee. No VAT is charged on the court fee of the land registry office. You can look up the fee items in the fee schedule (Kostenverzeichnis) of the GNotKG and the tax rate in § 12 UStG.

Spanish costs on your side = cost of the Tasación + loan amount × agreed commission rate. This refers to the comisión de apertura, the contractually agreed one-off commission for providing the loan. Only enter it if your offer includes it. The valuer's fee and the commission come from your offer, not from an official fee schedule.

For the Spanish residential property financing considered here, the bank has borne the following costs of setting up the mortgage since 16.06.2019:

• Gestoría: the processing service for the administrative steps of the loan, according to Art. 14.1.e).i Ley 5/2019.
• Notary: the fees for the mortgage loan deed, according to Art. 14.1.e).ii Ley 5/2019. Anyone requesting additional copies pays for them.
• Registro de la Propiedad:the Spanish Land Registry and the registration of the security therein, pursuant to Art. 14.1.e).iii Ley 5/2019.

This breakdown under Art. 14 Ley 5/2019, the Spanish Real Estate Credit Act (LCCI), relates to the loan. The costs and taxes of the property purchase come on top.

The AJD has its own legal basis, the Spanish tax on certain notarised legal acts (Actos Jurídicos Documentados): in the case of a mortgage loan, the lender has owed it since 10.11.2018. This is governed by Art. 29 TRLITPAJD, the consolidated statutory text on transfer tax and stamp duty, as amended by RDL 17/2018. The LCCI is therefore not the legal basis for this tax liability.

For the value-dependent AJD, what counts under Art. 30 is the responsabilidad hipotecaria: the total mortgage liability shown in the deed, including co-secured ancillary claims. Art. 31 governs the fixed rate and the value-dependent rate. Because the calculator does not ask for this liability amount, it lists the AJD as a bank item without a figure. The loan amount alone would not be a reliable basis for this calculation.

Model interest rates: same term, fully repaid loans

The interest rate comparison applies to two fully amortising euro loans with a fixed nominal rate and the same term: by the end, the capital is fully repaid. The loan amount and term are the same, while the offered nominal rates may differ. TIN (Tipo de Interés Nominal) is the Spanish term for the nominal interest rate.

The monthly annuity, i.e. the regular instalment made up of interest and repayment, follows the formula M = K × i ÷ (1 − (1 + i)⁻ⁿ). Here, K is the loan capital, i is the annual nominal rate as a decimal divided by twelve, and n is the number of monthly instalments. For an interest-free loan, the instalment is the capital divided by the number of months.

The monthly interest is calculated on the outstanding capital; the remainder of the instalment repays the debt. The calculator totals the interest from the repayment schedule rounded to the cent, including the adjusted final instalment. The first instalment falls due in the month after disbursement.

With a shorter fixed-rate period, the interest rate comparison does not apply; the calculator does not invent a follow-on rate. Variable or mixed rates, repayment suspensions, and bullet loans with capital repayment only at the end lie outside the model. The other blocks remain available with a shorter fixed-rate period; the outstanding balances shown remain projections based on the model interest rates.

Wealth tax: remaining capital and use of funds by route

The tax block treats you as a non-resident, i.e. a person not tax-resident in Spain. For wealth tax, the obligación real then applies, the limited tax liability for assets located in or exercisable in Spain. In addition to wealth tax, the calculator takes into account the ITSGF, the state solidarity tax on large fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas).

Tax effect = modelled tax without loan deduction − modelled tax with permissible loan deduction. Tax year, assets and regional selection remain the same for both paths. Each path uses its own capital balance as at 31 December of the selected year, because the repayment schedules can differ.

For the property, the model applies the higher of the purchase price and the known Katasterwert, and adds your other Spanish, non-exempt assets. The Katasterwert is the official value from the Spanish land register (Kataster). Under Art. 10 Ley 19/1991, a value established or reviewed by the authorities for other taxes must additionally be taken into account if it is higher. The calculator does not query this third value; if it exists, the modelled valuation is not sufficient for your declaration.

The statement leads from gross assets via deductible debts and the tax-free allowance to the Vermögensteuer and the supplementary ITSGF. Allowances and tax brackets are provided by the calculator for the tax year. A debt deduction only saves tax if it reduces the tax actually due. For tax years not yet concluded, you see a projection based on the legal status on file.

What you need to plan for outside the comparison

You receive the difference in collateral costs and the difference in modelled interest separately. The calculator does not determine an overall cheaper financing route. For your complete financing plan, the following items in particular need to be added:

• Execution and administration fees under KV 22110 ff. for additional notarial services;
• further separate notarisation matters outside the base case under § 109 para. 2 no. 3 GNotKG;
• the cancellation of both charges at the end of the financing;
• commitment interest on committed but not yet drawn capital;
• brokerage and valuation costs outside the explicitly entered Tasación, in particular at the German bank, as well as additional copies and other disbursements;
• opportunity costs of the tied-up equity, i.e. the potential return you forgo by using it in this way.

This distinction is what makes the calculator useful: you can identify the calculable difference and add the remaining items from your own offers yourself. Available liquidity and an unencumbered German property are matters for you to assess according to your own personal planning.

Special cases

A higher Grundschuld amount or a Grundschuldbrief

Take the nominal Grundschuld amount from the bank's form. An amount higher than the loan can trigger higher fees; subsequent repayment does not automatically reduce it. A Buchgrundschuld or Briefgrundschuld affects the registration fee, not the factor used for the notarisation fee. For the reuse or assignment of an existing Grundschuld you need your own separate cost breakdown: the calculator only records a new charge in the base case.

The Tasación is below the purchase price

A lower valuation can reduce the credit limit. You close the gap through additional funds, a different financing arrangement or a lower purchase price. A higher valuation does not increase the limit above the threshold set by the purchase price in the initial assumption. Arrange the valuation before a binding reservation without a financing clause. The preparation explains Tasación – property valuation in Spain.

Equity, purchase-related costs and a combination of approaches

For your liquidity needs, the entire acquisition counts: required own funds = purchase price + purchase-related costs − actually available loan disbursements. Also factor in purchase taxes, notary and land registry registration of ownership as well as legal support. For a resale property, the transfer tax ITP (Impuesto sobre Transmisiones Patrimoniales) regularly applies; its progressive scale charges the portion of the purchase price falling into the respective bracket. For a taxable new-build sale, the Spanish VAT IVA (Impuesto sobre el Valor Añadido) and the AJD on the purchase regularly apply in addition. You can find the amounts under purchase-related costs in Mallorca.

An additional German loan or a securities-backed loan can provide liquidity, but it remains a debt and belongs in the creditworthiness assessment. Calculate your total purchase budget here:

You can combine your own funds with a Spanish mortgage. Personal liability, guarantees and additional security arise from the contracts. Splitting across several simultaneous loans requires its own planning; the comparison considers each approach for the same financing need.

Debt deductibility depends on the flow of funds

A German security does not rule out the Spanish debt deduction. Art. 9.Cuatro Ley 19/1991 explicitly names, alongside charges on Spanish assets in the case of obligación real, así como las deudas por capitales invertidos en los indicados bienes: also debts for capital invested in these assets. It follows for your purchase that a German loan can be deductible if you prove its use for the Spanish property. What matters is the connection to the non-exempt assets. The rule is set out in Art. 9 Ley 19/1991.

Conversely, a mortgage on the Spanish property is not sufficient if the money was used neither for its acquisition nor for an investment in this property. The Spanish tax authority AEAT explains this exclusion by referring to the Tribunal Supremo, Spain's highest court: STS 167/2023 of 13.02.2023. A subsequent mortgage for other expenses therefore does not create a deduction merely through the Spanish security. See the AEAT explanation on deductible debts.

You provide proof as a taxpayer using any legally admissible means of evidence. The AEAT explicitly confirms for personal loans that the documented use for property acquisition counts regardless of the loan type. Therefore, keep the loan agreement, disbursement receipt, bank statements and purchase price payment together so that the flow of capital remains traceable. An entry in the land register does not replace this link. You can find the explanation in the AEAT manual on limited wealth tax liability.

Deductible is the proven, still outstanding capital balance as at 31 December, not the original loan amount and not the registered liability amount. Interest is never deductible under this debt deduction. Art. 25 and Art. 29 Ley 19/1991 govern debt valuation and the tax reference date.

State the proof status for each route. In the case of mixed use, you need the partial amount still outstanding at year-end that is verifiably attributable to the Spanish property. The original purchase share is not sufficient without allocation of subsequent repayments. Where allocation is unclear, the calculator shows a range between no deduction and full deduction, not a guaranteed saving.

Lombard loan as a third route

A Lombard loan is a loan secured against pledged securities. Your portfolio remains invested; taking out the loan alone does not realise any capital gains from a sale. Ongoing income may still be taxable, and future returns are uncertain. The credit line depends on the accepted securities and the bank's valuation discounts.

If the loan-to-value falls, the bank may demand additional collateral or repayment. This need for additional funds is called a margin call. If you cannot meet it, the pledged securities may be sold. Plan liquidity for price losses and repayment, and check interest rate adjustments as well as termination rights. For insurance policies, their loanability and contractual consequences also come into play.

A securities-backed loan is not automatically cheaper and remains borrowed capital. It lies outside the two modelled property loans. Its possible Spanish debt deduction also depends on the documented use of the capital.

Deadlines and forms

Identification, account and purchase preparation

Apply early for your NIE, the Spanish identification number for foreign nationals (Número de Identidad de Extranjero). You need it for the tax processing of the purchase even if your loan comes from Germany. On its own, it does not prove tax residency in Spain. The application can be made through the relevant Spanish consulate or in Spain. The documents include the application form EX-15 and the fee form Modelo 790, Código 012; the responsible office will inform you of the current procedure. The government overview of the NIE application explains the responsibilities and forms.

Clarify with your bank whether the offer or the agreed payment processing requires a Spanish account. It can facilitate loans and ongoing payments. Coordinate banker's draft or bank transfer, lead time and availability of the purchase price with the bank, seller and notary's office; not every payment must necessarily go through a Spanish account.

Before the binding reservation, have ownership, encumbrances, permits and contracts checked. Coordinate the financing commitment, payment and powers of attorney with one another. The process up to registration of ownership is explained by the legal process for buying property in Spain.

Proving the origin of funds and their use

The bank and notary's office must verify the origin of the funds used. Prepare the documents before the transfer and get confirmation of which evidence, translations or certifications are required for your case. Depending on the source of the funds, you will need in particular:

• bank statements and proof of income for savings;
• sales contracts and payment receipts for proceeds from property or securities;
• gift or inheritance documents including the relevant tax documents in each case;
• loan agreements and disbursement confirmations for a German mortgage or a Lombard loan;
• the subsequent transfer and purchase price receipts for use in Spain.

Origin and use must be documented separately. Incomplete documentation can delay payment release and the purchase; without documented use, there is also no basis for the debt deduction.

For cross-border payments, also check the reporting obligation under the German Foreign Trade and Payments Regulation (AWV). A transfer between your own accounts and the subsequent payment to a foreign seller must be assessed separately. Separate rules apply to cash transports. The guide Transferring money to Spain when buying property guides you through the transfer and documentation; the Bundesbank explains the payment reporting requirements for private individuals.

Documents before the Spanish loan agreement

Pre-contractually, you receive the FEIN (Ficha Europea de Información Normalizada), the standardised European loan information sheet, and the FiAE (Ficha de Advertencias Estandarizadas) with particular contractual risks. Plan for the statutory lead time as well as the prior notarial advice and review. The basis is Art. 14 and 15 Ley 5/2019. The preparation is explained by Mortgage as a non-resident in Spain.

The calculator assumes a single process: purchase, notarisation of the mortgage charge, loan agreement and disbursement all take place in the same month. If the steps fall in different months or legal states, entering a shared date does not fully reflect your case. The tax reference date at year-end remains separate from this.

Tax returns and ongoing costs after the purchase

For wealth tax, the Modelo 714 is used, and for the ITSGF the Modelo 718. Whether you need to declare or actually pay are separate questions: even without any tax due, a wealth tax return may be required if your gross assets exceed certain thresholds. You can check the applicable conditions, allowances and filing periods for your tax year using the wealth tax calculator linked below and the sources provided there.

You should also budget for the local property tax IBI (Impuesto sobre Bienes Inmuebles), community fees and ongoing utilities. Income tax for non-residents, IRNR (Impuesto sobre la Renta de no Residentes), is filed via Modelo 210 and can apply to a property used privately or left empty, even without actual rental income. Payment and filing deadlines depend on the specific tax, type of use and municipality.

If you rent out the property, you need to distinguish between the debt deduction for wealth tax purposes and a possible interest deduction for income tax purposes. For a holiday property used exclusively for private purposes, financing interest does not count as a deductible expense from rental income. For rented properties, it depends on residency status, use and how costs are allocated. The guide on IRPF deductions for landlords in the Balearic Islands covers Spanish income tax for residents; as a non-resident, you'll find the relevant framework under Taxing rental income as a non-resident in Spain.

Legal basis and status

The calculator draws its fees, tax rates and tax brackets from its stored register. What matters is the selected month of purchase and financing, as well as the separate tax year. The German cost calculation supports transactions from 01.06.2025 onwards; for earlier dates it does not provide fee information. The calculator displays the legal basis used and the corresponding sources alongside its result. Bank interest rates, loan-to-value limits, surveyor fees and commissions remain based on your own quoted offers.

• German notary costs: GNotKG, in particular § 34 with Table B, § 53(1) on the nominal amount, § 109(2) No. 3 on the subject matter of notarisation, as well as KV 21200, 14121, 14120, 32005 and 32014; plus § 12(1) UStG regarding VAT on notary fees.
• Spanish loan costs: Art. 14.1.e).i–iii and Art. 14.4 Ley 5/2019 for cost allocation and the agreed arrangement fee.
• AJD: Art. 29, 30 and 31 TRLITPAJD for the taxpayer, tax base, and the fixed and value-based rates; the change in who is liable for the tax was introduced by RDL 17/2018.
• Wealth tax: Ley 19/1991, in particular Art. 9.Cuatro, Art. 10, Art. 25 and Art. 29, as well as the additional provision on regional choice for non-residents. For debt deduction and case law, the AEAT explanation linked above, together with STS 167/2023, is decisive.
• ITSGF: Art. 3 Ley 38/2022; the calculation and how it interacts with wealth tax is explained by the related wealth tax calculator.

Related calculators

• Mortgage calculator Spain: Check the monthly instalment and repayment schedule for your Spanish loan.
• Mortgage ancillary costs Spain: Break down the costs surrounding your Spanish loan in more detail.
• Wealth tax calculator Balearic Islands: Check the wealth tax and ITSGF as well as the notes on Modelo 714 and Modelo 718.
• Purchase budget for non-residents: Work out which purchase price matches your available funds and purchase ancillary costs.