The Bayern Munich ace, who is currently in Brazil at the World Cup with Germany, is out of contract next summer and has attracted interest from some of Europe's biggest clubs.
Manchester United interest
That includes Chelsea and Manchester United, who were heavily linked with the 24-year-old for some time - although the interest from the Red Devils appears to have waned following the appointment of Louis van Gaal as manager. Former boss David Moyes has previously revealed that he 'put in a lot of groundwork' to try and land Kroos before he was let go in April.
Now it seems as though with Manchester United's interest dropping off, Real Madrid have taken up the slack and are close to completing the deal. Previous reports have suggested that Los Blancos had offered him a £4 million-per-year deal, and now Gallardo claims that the player is so keen on a move to the Bernabeu that he's rejected the chance to join Barcelona.
First signing for Real Madrid
"Kroos will be Real Madrid's first signing this summer. He likes the club, Ancelotti and the fans," he is quoted as saying. "Barcelona already contacted Kroos but he rejected them as he only wants to play for Real Madrid."
The news may come as a blow to Manchester United fans who wanted to see him strut his stuff at Old Trafford - but it seems as though Van Gaal and club executive vice-chairman Ed Woodward have decided to switch their attention to other targets.
Athletic Bilbao midfielder Ander Herrera was announced as a Manchester United player yesterday, while they are currently being liked with a swoop for Arturo Vidal and Bastian Schiweinsteiger.
The Red Devils weren't the only club in the race for Kroos it seems however - the Daily Star claimed yesterday that Chelsea had offered him a huge £4.6 million contract to head to Stamford Bridge.
Jose Mourinho has already lured Cesc Fabregas to Chelsea while he has an embarrassment of riches who can play in attacking positions - so whether there is a place for Kroos in west London remains to be seen.