Us­ing your per­sonal pen­sion sav­ings

Main changes to the general scheme:

• Permanent authorisation, a combined ten-year disposal period, i.e. 120 months

• Maximum amount adjusted in line with the consumer price index at the beginning of each year
  - First in January 2027
  - Amounts have remained unchanged since the beginning

• The maximum amount will be tied solely to individuals; there will no longer be any connection between spouses/jointly taxed parties

• It will no longer be possible to apply for housing savings for property purchases under the general scheme

• It is made a condition that the residential property against which the loan is secured:
  - Is the applicant's legal domicile
  - That the applicant holds at least a 30% ownership share in it

• Holders of residence rights will no longer be able to use the general scheme

• Application form on skatturinn.is

• An application applies to contributions paid after the application is received
  - Exception: applications received before 1 December 2026 will apply from January 2026 (this is not optional)

Main changes to the first home scheme:

• A combined ten-year disposal period, i.e. 120 months, instead of a continuous period as before

• Maximum amount adjusted in line with the consumer price index at the beginning of each year
  - First in January 2027
  - Amounts have remained unchanged since the beginning

You can only allocate premiums, not returns, so it is not your total assets in the fund that are in question. Examples of what could cause a lower allocation than the premiums paid during the period:

• The employer has not submitted all premiums.

• You have used part of your additional premiums to pay for insurance.

• You used the advance payment of additional savings in 2014 or 2021–2022.

• You transferred part of a balance from another fund accumulated before 01.07.2014.

• Returns have been negative during the period.

• The employee contribution must be at least 2%; the employer contribution is not sufficient on its own.

• The individual maximum is ISK 500,000 per year, divided into ISK 333,000 (4% employee contribution) and ISK 167,000 (2% employer contribution).

• To reach the maximum amount, wages must be ISK 695,000 before tax, with a 4% employee contribution and a 2% employer contribution.

• If the application is received by the Tax Authority, for example in October, the tax-free allocation for that year is only ISK 500,000 / 12 months × 3 months).

The Tax Authority confirms the final amount taking into account the validity period of the application and balances in other funds, where applicable. Some people receive less than expected due to the above-mentioned limitations. Housing savings are often a more realistic option as a transfer payment than a first disbursement.

Limitations of additional savings:

• Employee contribution is a requirement; employer contribution is not sufficient on its own.

• Minimum employee contribution is 2%, or at least equal to the additional employer contribution.

• Maximum employee contribution is 4% and maximum employer contribution is 2%.

Limitations of additional savings AND designated private pension savings:

• Contributions only, not returns.

• Option for limited utilisation; in that case the fund may only disburse the registered amount, or full utilisation; in that case the fund may disburse all of your contributions and the employer's contributions paid into additional savings during the period, subject to the limitations of the law.

• The employer must have settled contributions in order for payment to be possible.

• If you have transferred additional savings accumulated before 01.07.2014 between funds, it is not possible to use them as housing savings.

Other factors may apply; see the answer to: Might I need to make any changes to my application?

The reason for rejection can be found in the email from the Tax Authority and under the communications tab on skattur.is or on leidretting.is.

Let us set realistic expectations regarding the amount and payment timeline. Some receive less due to limitations, and housing savings are more realistic as a deferred payment than as a first disbursement.

Yes, you can use the first home scheme if you meet the following conditions:

• If you/your spouse did not own a property in the last 5 years prior to the application.

• If your income tax base + total capital income is 15,901,523 kr. or lower (2025).

• If applicable, the already used amount/period of the general scheme is deducted.

Designated private pension savings may be used in the first home scheme:

• Designated private pension savings are paid tax-free as a lump sum into a loan every April, once additional savings have been allocated, if applicable. This was first done in 2024 for contributions made in 2023.

It is too late to use the first home scheme if more than 12 months have passed since the purchase agreement was made. However, you may potentially use the general scheme whether you are the owner of your first home or other properties.

• You cannot apply for housing savings under the general scheme, only under the first home scheme.

• The tax exemption applies to accumulated additional contributions (maximum 4%+2%, excluding returns) for the pay periods during which you were not a property owner, from 01.07.2014 or later up to the date of the property purchase.

• You can apply for regular payments towards a loan. The application does not apply retroactively; the tax exemption only applies to future contributions (maximum 4%+2%, excluding returns) for pay periods from the date you apply on skattur.is.

No, it is not too late. Under the general scheme, you can apply for regular payments toward a loan following a home purchase: future contributions for pay periods during which you are a homeowner are paid regularly toward the loan from the time of application until the period ends. Contributions for periods that pass between the home purchase and the time of application are not utilised.

An application generally applies to contributions paid after the application is received. There is one exception to this rule: applications received before 1 December 2026 apply retroactively to accumulated contributions from January 2026.

In terms of monetary value, the tax exemption is most beneficial if the applicant manages to fully utilise the maximum allowance for each year individually. Some achieve better overall utilisation in monetary terms if the "housing savings" were not used, or used for a shorter period, while "regular loan payments" are used over a longer period. The sooner one begins contributing to supplementary savings, the more housing savings the applicant has the opportunity to utilise when the time comes, and the sooner an application is made for allocation toward a loan, the more pay periods can be utilised.

An individual earning 695,000 ISK per month in salary can fully utilize the tax exemption each year with a 4%+2% contribution rate, but the allowance for allocation toward a loan does not carry over between years.

The reality, however, is that since the down payment/deed payment is often a bottleneck when purchasing a property, many people apply for "housing savings" even if the maximum annual allowance is not fully utilised (e.g., due to low wages, a low employment ratio, or because the employee contribution is 2% rather than 4%).

All of this, however, depends on individual circumstances and each applicant's own choice, and whichever path is taken, it is worthwhile to understand the options available in the situation and make an informed decision, so that nothing comes as a surprise later.

The entire process requires cooperation between the applicant, the Tax Authority, the custodian, and employers. Also the lender for regular loan payments.

For the disbursement of housing savings/payment towards a loan, the following must take place:

• Confirmation from the Tax Authority must have been received in the custodian's/lender's system, although applicants often receive confirmation up to a week earlier.

• The employer must have already paid contributions.

• The loan payment window must be open - if payment is to be made towards a loan.

From the receipt of an application until the Tax Authority confirms/rejects it, up to 2-5 weeks may pass. Housing savings are therefore generally more realistic as a closing payment than a first disbursement.

• Under the communication tab on the application form, you can track the status of your application and utilisation. There you can also find a receipt/confirmation that the application has been submitted, along with messages/comments.

• In online banking, the payment history of loans is visible.

• In the Arion app, you can see whether payments are active and how much has been paid.

• On pension statements at arionbanki.is/minarsidur, all disbursements and transactions are visible.

On the tax authority's website, various information about the options can be found, e.g. Private pension savings - allocation to housing loans | Ísland.is.

Yes, it is your responsibility to ensure that the Tax Authority has the correct information at all times and to respond to any comments from the Tax Authority, if applicable. If you are in doubt, you should review your information on skattur.is regarding the first home scheme/on leidretting.is regarding the general scheme - before seeking information from the Tax Authority.

• New application. It is your responsibility to apply for the new scheme on skattur.is. It does not automatically restart, even if you have previously used the tax-free schemes. The Tax Authority will specifically announce when applications for the new scheme have opened on skattur.is.

• New employer. If you change jobs, you need to notify the custodian/fund of your new employer. This is done in the Arion app. The fund will then send your pension agreement to your new employer so that payments can begin. There is no need to update the application on skattur.is or on leidretting.is.

• Name of fund/custodian. Enter the name of the new fund if you are now paying additional savings into a different fund than before. The name should be visible on your payslip/agreement/pension statement/Arion app.

• Name of fund/custodian. The fund you applied to does not hold additional savings or designated private savings, but rather tied or voluntary private savings of mandatory savings. The correct fund name must be entered in the application, if you hold savings in another fund.

• Loan number/loan agreement. For purchases and refinancing. Add the number to the loan list, if applicable. Send a copy of the loan agreement with the application. This can be found in online banking, the Arion app, and on loan documents. The applicant adds the loan number to the application's loan list if the loan has not already been registered on the tax return.

• Annual allowance fully utilised. A common explanation, particularly if payments cease in autumn or at the beginning of the year, is that the annual allowance has been fully utilised. This can be verified on the application overview page on skatturinn.is or leidretting.is. All else being equal, regular payments resume in the new calendar year, usually in March, when January contributions — which are due at the end of February — are allocated to the loan. Individuals with a monthly salary of ISK 695,000 (based on a maximum utilisation of ISK 500,000) are able to fully utilise the tax exemption each year with a 4%+2% contribution for all 12 months of the year.

• Your account number. Regarding housing savings.

• Registration number of the property/permanent number of a new build. This can be found in the property register of the National Registry at skra.is and on the purchase agreement.

The sooner you start contributing to supplementary savings (from 01.07.2014), the more housing savings you will have available to purchase your first home. Due to tax exemptions and employer contributions, this is one of the most cost-effective ways to buy a property and/or pay off a loan faster.

In the Arion app, you can set up an agreement and register a new employer if you change jobs. The fund will then send your pension agreement to your new employer so they can begin making payments. Otherwise, savings will stop accumulating.

From January 2023, it is permitted to use designated private pension savings tax-free under the first-time buyer scheme. See more details here: NEW 2023! I have not owned a property for 5 years – can I take advantage of the first-time buyer scheme?

Private pension savings covers several types of pension savings, including additional, designated, restricted and voluntary private pension savings. It also includes inherited private pension savings.

• General scheme: Additional pension savings.

• First-home scheme: Additional pension savings and/or designated private pension savings.

No, if you have an active application for the First Home Remedy through Frjálsi on skattur.is, Frjálsi will automatically check whether there is room to apply the specified private pension savings toward a loan payment.