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.

Those who have purchased their first residential property in the period from July 1st 2014 to June 30th 2017 are also authorized to use the provisions of Law no. 111/2016 on withdrawal of additional personal savings without tax liability. In this connection, it does not matter if authorization according to previous law (the pension savings method of the correction ("Leiðréttingin") was used or not. In these cases the same rules/requirements apply to the withdrawal as for those who purchase their first residential property on July 1st 2017 or later, including that their share in the property is not less than 30% and the owners are not more than two on the date of purchase. Those who purchased their first property in the period in question need to apply for withdrawal and continued disbursement to subsidize collateral loans before the end of the year 2017 if the choose to utilize this authorization for ten years from the beginning of the disposal. If an application is not submitted before that time the authorization to withdrawal/disposal to subsidize collateral loans will expire as from June 30th 2019.

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%. This means that if buyers are more than two none of them can use the authorization of withdrawal/disposal to subsidize collateral loans. In this context it does not matter if the owners are now fewer than three if they were three or more when the property was purchased.

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
  • Legally notarized bond

However this can differ depending if this is a first time application or if the application concerns an authorization to use this new method instead of the previous one or if it concerns an authorization to subsidize collateral loans.

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) .

Legally notarized bond – The lender or 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)