First purchase of a residential property – Disposal of additional pension savings

Myndin er teiknuð og á henni eru þrjár fjölskyldur

Individuals who purchase a residential property for the first time are authorized to disburse, up to a certain extent and without tax liability (tax free), additional pension savings paid into a personal pension fund (séreignarlífeyrissjóður). It is also allowed to withdraw and disburse pension premiums to subsidize a collateral loan.  The authorization applies in general from July 1st 2017 and applies to premiums that have been paid for salary for the same period, up to a maximum ten year consecutive period,  starting at  the time when their disbursement commences with withdrawal and/or disbursement to subsidize a collateral loan. However, it may be permitted to withdraw premiums for salary from July 1st 2014 up to the date of purchase of the property if the applicant so chooses, if all requirements, mentioned in Law no. 111/2016, on support to purchase first residential property, are fulfilled. 

The authorization applies to those individuals that have not owned a residential property previously. The applicant has to purchase a property either himself or jointly with another individual, though his share of the property has to be at least 30%. The application must be received by Iceland Revenue and Customs within twelve months from the signing of the purchase agreement. 

Accumulated premiums may be used to purchase first property or new building and/or to subsidize collateral loans against the property.  If the loans are not inflation-linked (indexed) it is also permitted to use premiums as instalments on them, according to further rules there of.

The authorization does not apply to land, occupation right, extension to property or refurbishment.

The application is available at

 Application – Documents required

The general rule is that when applying for disposal of additional pension savings the applicant has to submit:

  • Legally notarized purchase agreement

Application form is available online and will not be finalized without the documents required.

Where to acquire the requested documents?

Legally notarized purchase agreement – The real estate agent who handled the purchase or a district commissioner (Sýslumaður).


Additional information

Rules and regulations

The law on the purchase of first residential property – lög nr. 111/2016 um stuðning til kaupa á fyrstu íbúð 

The regulation on the purchase of first residential property –  reglugerð nr. 555/2017 um samræmt verklag við ráðstöfun iðgjalda til séreignarsparnaðar til stuðnings kaupa á fyrstu íbúð


Instructions (available in Icelandic only) 

Questions and answers (available in Icelandic only)