The Spain international midfielder has suffered a difficult time ever since his £16 million move from Benfica just 12 months ago.
The 26-year-old has failed to nail down a regular place in the City engine room and he has also come in for criticism as a makeshift centre-back.
City are interested in Atletico defender Martin Demichelis and a deal appears close, according to reports in Spain.
The two deals aren't linked but Atletico are aware of Garcia's situation and are willing to take a chance for around £8.5m.
Garcia started out at Real Madrid, whose partner is also from the Spanish capital, and he could be tempted to return home with his World Cup squad spot now up for grabs.
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