The former Barcelona, Real Madrid and Atletico Madrid player thinks that it is only right for the show-piece event to be held in the capital as both competing clubs are based there
The Blancos defeated the Blaugrana 4-2 over two legs to book their place in the May show-piece event, and on Wednesday night Diego Simeone’s men set up an all-capital-club battle by drawing 2-2 with Sevilla (and winning 4-3 on aggregate).
But the German, who has extensive experience of playing in Spain, criticised the prospect of the cup final being held at Barca’s ground this season.
"For me, the final should not be played at Barcelona's stadium," he told reporters after playing in a padel tennis tournament for former Liga stars on Thursday. "Both sets of fans are here in Madrid and we have two enormous stadiums.
"It would be a lot nicer to play it here in Madrid. That's my opinion on the issue and that's what I would like to see happen.”
Schuster showered Jose Mourinho’s men with praise for their performance against Barcelona on Tuesday night, and believes a sturdy defence is the way to beat the Catalunya club based on recent results.
"Real Madrid's superiority was reflected in the result and how they handled the game," the German added. "It was the best performance I have seen Real Madrid put in at Camp Nou.
"I have never seen Madrid defend as well as they did on Tuesday - and not just in a line of four across the midfield or with [Sami] Khedira and Xabi Alonso but [Gonzalo] Higuain, [Angel] Di Maria and [Mesut] Ozil did their share of defending too.
"Real Madrid defended like AC Milan did against Barcelona a couple of weeks ago [when they won 2-0 at San Siro].
"They sprung a number of attacks on the break, they were daring in attack but above all, their defending was solid. To see Barca hardly create any chances at all deserves merit."
Barcelona have been accused of looking weaker in February than the invincible facade they showed throughout the first half of the campaign, but Schuster condemned criticism being labelled at stand-in coach Jordi Roura.
"I don't think the post-match criticism aimed at Jordi Roura was very fair," he said. "He's only doing his job.
"They had already suffered a huge blow to their morale after the defeat to Milan in the Champions League. They looked a little lost that night but it's just one game and there's no need to make a drama out of it.
"I don't think Barcelona have taken their foot off the gas, nor do I want to place any importance on Tito's absence as he is still under contract with them.
"Barca are a highly experienced side and the only thing that has happened is that they have lost two matches to teams like AC Milan and Real Madrid, both of whom were the better team in their respective matches, that's all."