For non-residents, mortgage loans offer a clear evidentiary advantage: their notarisation and registration in the Land Registry make it easy to prove their existence, amount, and link to the property. This traceability makes mortgages the most robust option from both a legal and tax perspective.
However, Lombard loans — even when arranged abroad and secured by financial assets can also be deductible, provided their direct link to the Spanish property purchase is clearly demonstrated.
Their flexibility makes them attractive for certain high-net-worth profiles, but they require flawless documentation: loan agreements, bank certifications, and complete traceability of fund flows.
For transactions of this kind, the involvement of specialised mortgage brokers such as Lionsgate Capital is essential. Acting as a single point of contact with all banks, both national and international private institutions, they secure the most suitable financing for each client’s property purchase in Spain.
In the case of mortgage financing, the proof is usually straightforward: a mortgage loan granted at the time of purchase and used to pay the purchase price can easily be evidenced through the notarial deeds of sale and mortgage.
For Lombard loans, however, the most common issue is lack of traceability, as it is necessary to demonstrate explicitly that the loan disbursement was applied to the property purchase.
It is equally important to avoid mixed-purpose loans, where part of the funds are used to buy the property in Spain and part for other assets, since lack of direct linkage may jeopardise deductibility.
Mitigation requires thorough prior planning, the use of dedicated accounts for the transaction, consistent banking documentation, and, where appropriate, notarisation of key documents.
In high-value operations, experience shows that three pillars determine success:
- Prior legal and tax planning.
- Perfectly synchronised execution.
- Organised and verifiable evidentiary documentation.
