Tax efficient pension options

An extra pension can be used towards your current mortgage or buying a new home.

Our three options

Which option should you choose?


The government now offers three options with regard to the tax free payment of a private pension towards a mortgage:

  • Private pension towards a mortgage: Effective from July, 2014 and extended to the 30th of June, 2021
  • Saving for a home: Effective from July, 2014 until the 30th of June, 2021
  • Support for first buyers: Effective from the 1st of July, 2017 and retroactive to the 1st of July, 2014

The options outlined above are only available to those who have a private pension. More information is provided below.

Open a private pension plan

Private pension towards a mortgage


A tax free option for those who already have a mortgage.  Effective from July, 2014 and extended to the 30th of June, 2021.

Authorisation for the tax free payment of a private pension towards a mortgage has been extended by two years or until the 30th of June, 2019. The initial authorisation was effective from the 1st of July, 2014 until the 30th of June, 2017.

A limited amount of a private pension can be used towards the principle amount of a mortgage, used to purchase or construct a property for own use.

Saving for a home


A tax free option for those planning to buy a home.  Effective from July, 2014 until the 30th of June, 2021.

Authorisation for the tax free payment of a private pension towards saving for a new home for own use. The premium paid between the 1st of July, 2014 until the 30th of June, 2017 can be used for this purpose but you can use the funds to purchase a property until the 30th of June, 2021. The owner of the pension plan cannot own a property during the aforementioned period.

First home


A tax free option for those planning to buy their first home. Effective from the 1st of July, 2017 and retroactive to the 1st of July, 2014.

The Icelandic Act on first home buyer assistance was passed on the 1st of July, 2017. The Act authorises the tax free payment of a private pension towards buying a home or paying towards a mortgage. Anyone can utilise this option for a period of ten years. The Act is intended to help first home buyers.