Premiums in private pension are regularly transferred to the property loan principal for reduction.

• The maximum amount for married couples and those who meet the conditions for joint taxation is mutual, and can be a maximum total of ISK 750,000 per year, of which ISK 500,000 from the contribution of fund members.
• The maximum amount for single individuals can be a maximum total of ISK 500,000 per year, of which ISK 333,000 from the contribution of fund members.

A person who does not own a residential housing for their own use may be entitled to withdraw premiums from a private pension fund that have been paid in the period from 1 July, 2014 to 31 December, 2025, up to a certain amount, if the person confirms the purchase of such housing at the latest 31 December, 2025.

• The maximum withdrawal for married couples or those who meet the conditions for joint taxation, if all conditions are met, is a total of ISK 750,000 per year. 
• The maximum withdrawal for single individuals, if all conditions are met, is a total of ISK 500,000 per year. 

Those who are buying their first property are permitted to use private pension savings that have been saved for up to 10 years tax-free for a down payment or to pay down the principal. It will also be permitted to pay tax-free into installments of non-indexed loans taken out for the purchase. 

The resource is divided into three options, but the fund member also has the choice to mix them together:

1. Premiums that have been paid into private pension savings from 1 July, 2014, and up to the purchase of a property, can be used tax-free for payment on the first purchase.
2. Premiums for private pension savings can be used after the first property is purchased tax-free to pay towards the principal of a property loan taken out for the purchase.
3. Premiums for private pension savings can be used after the first property is purchased tax-free to pay installments.

The specified personal pension can be used for the purchase of a first property, or as a payment into a loan for the first property purchase according to certain conditions. More information about first property purchase can be found on the Iceland Revenue website.

• Maximum payments per year for cohabitants is ISK 750,000, but ISK 500,000 for individuals.
• If a fund member saves in a traditional private pension, then payments from the specified private pension will only be added if the authorisation is not fully used.

Payments of the specified private pension into the loan proceed in such a way that during the year, the traditional private pension savings are regularly paid into the loan. If the maximum is not reached after the year, the specified private pension is used to fully utilise the authorisation.

The payment of the specified private pension into a loan or for the purchase of a property will therefore not take place until after the year has passed and it is clear that the authorisation is not fully utilised with the traditional private pension.

 When can the specified private pension be used for a property loan?

If you are not saving into a traditional private pension, the specified private pension is fully used for payments into a property loan until the maximum payment per year is reached.

If you save 4% of your salary into a traditional private pension (2% employee contribution, 2% employer contribution) you fully utilise the ISK 500,000 authorisation with traditional private pension if you receive approximately ISK 1,387,500 or more in monthly salary.

If, however, you save 6% into a traditional private pension (4% employee contribution, 2% employer contribution) you fully utilise the ISK 500,000 authorisation if you receive approximately ISK 695.000 or more in monthly salary.