Private pension savings for first time home buyers

An application should be submitted within 12 months from the purchase date.

After the application is submitted, it enters the standard processing procedure, which takes approximately 4-6 weeks.

You will receive an email notification as soon as a decision has been made, and you can access it on the Tax Authority's service portal.

The start date for utilization can be the month when you began contributing to supplementary pension savings, but it may also be later.

The start date for withdrawal can go as far back as July 2014.

If you have owned more than 30% or a larger share in residential property in Iceland within the past five years, your application cannot be approved.

These conditions apply only to residential property. An application may be approved if you have owned other types of property, such as:

• Commercial property

• Summer houses

• Residential property in another country

• Inherited property

• Less than a 30% ownership share

• A housing right within the past five years

The program can only be utilized to acquire direct ownership as a property owner. Therefore, it cannot be used for the purchase of a housing right.

You can apply to begin allocating private pension savings towards a mortgage even if you do not have a balance in a private pension fund.

In this case, future contributions to private pension savings will be automatically paid towards the mortgage. Applications for utilizing private pension savings must be submitted no later than 12 months after the purchase agreement is signed.

If you purchase another residential property to replace the one sold within twelve months, you may continue making payments towards the loan for the new property. This is conditional on it occurring within the ten-year period, counted from the time the allocation first began. This can be done by modifying the application on the Tax Authority's service portal.

Note that the maximum duration for allocating private pension savings in connection with the purchase of a first home can never exceed ten years and is always counted from the date the allocation first started.

Your private pension fund, as the custodian of your private pension savings, is fully responsible for making the payments.

Payments are generally made towards the loan on a monthly basis, but custodians are permitted to make payments every three months.

If the maximum amount is reached within the year, any excess contributions will be transferred to your private pension fund.

These payments can then be withdrawn later, subject to the general rules for withdrawing private pension savings.

If contributions to the pension fund stop for part of the period, it will not be possible to allocate payments towards the loan for that time. If you resume contributions later, the monthly allocation can restart, but only for the remaining time within the continuous ten-year period.