Temporary Rental (seasonal rental)
Description:
Lease agreement for a defined period, linked to a specific cause and not intended as a habitual residence.
Characteristics:
- Duration of less than one year (usually between 1 and 11 months).
- Documentary proof of the temporary reason is required (e.g., studies, work, health).
- There is no right to a forced extension.
- The property cannot be used for tourism without proper registration.
- Less stability for the tenant, but greater flexibility for the owner.
- Ideal for students, temporary expatriates, or displaced workers.
Long-Term Rental (habitual residence)
Description:
A contract intended to meet the tenant’s permanent housing needs. This is the most common type of contract and offers the greatest legal protection.
Characteristics:
- Minimum term of 5 years (7 if the landlord is a legal entity).
- Right to mandatory extension and tacit extension of up to 3 years.
- The legal deposit is one month (plus optional guarantees).
- Greater legal protection for the tenant.
- Requires registration and serves as a tax/residential address.
- Ideal for long-term national and foreign residents.
Purchase and Sale of Real Estate
Description:
Legal transaction through which ownership of a property is transferred, whether new or second-hand.
Characteristics:
- Formalization through a public deed and registration in the Property Registry.
- Includes fees: notary, registration, property transfer (ITP) (second-hand) or VAT (new construction), and administrative costs.
- May involve a mortgage, appraisal, and creditworthiness analysis.
- Generates full rights to the property.
- Ideal for permanent residences or second homes.
Real Estate Investment
Description:
Acquisition of real estate for profit purposes, whether through rental, appreciation, or resale.
Characteristics:
- Options: flipping, coliving, room-based rentals, etc.
- Average return in Madrid: 4–6% (varies by area and state).
- May require renovation, professional management, and market research.
- Important tax requirements: Personal Income Tax, Non-Refundable Income Tax, Corporate Tax.
- Ideal for individuals, foreigners, or companies with a vision for asset management.