Private Pension Payments Still Allowed Toward Mortgage Principal
10. January 2025
The option to use private pension savings tax-free toward the principal of mortgages was recently extended and is now valid until the end of 2025. If this option was used last year, there is no need to reapply for continued use.
The allowable amounts remain unchanged: individuals can allocate up to 500,000 ISK from their private pension savings tax-free per year toward mortgage principal. Married couples and jointly taxed individuals can allocate a total of 750,000 ISK.
Those who used this option last year do not need to reapply with the Tax Authority; the arrangement will automatically continue this year. However, if the option was not used last year, an application must be submitted to the Tax Authority to begin payments this year. Additionally, the Tax Authority must be notified if payments from private pension savings toward mortgage principal are to be discontinued.
No changes were made to the rules for using private pension savings for the purchase of a first home.
Here, you can find more detailed information about private pension savings for real estate purchases.