Automatic renewal of paying supplementary pension savings towards mortgage
This was announced by the Ministry of Finance and Economic Affairs.
The announcement further states that Althingi has approved an extension of the tax-free use of supplementary pension savings (also known as private pension savings) towards the principal of mortgages for purchasing housing for personal use and extended the authorisation for tax-free use of accumulated supplementary pension savings to purchase residential property for personal use. The authorisation has been extended up until and including 31 December 2025. Applications are submitted through leidretting.is.
ISK 500,000 for individuals and ISK 750,000 for couples
The reference amounts for these authorisations remain unchanged. In both cases, the maximum annual amount for an individual is ISK 500,000 per calendar year. For married couples and persons eligible for joint taxation, the combined limit is ISK 750,000 per calendar year.
It had been necessary for people with active arrangements for allocating supplementary pension savings towards their mortgage principal to reapply to continue using the solution; now, as mentioned earlier, the arrangement is renewed automatically.
Those who wish to end the arrangement must notify Icelandic Revenue and Customs (“Skatturinn”) through the website www.leidretting.is. Otherwise, pension contributions will continue to be allocated toward the principal of the mortgage.
Solutions for first-time buyers
Solutions for first-time home buyers remain unchanged, allowing first-time buyers to use supplementary pension savings tax-free for down payments on their first home.
It is worth noting that those who have fully utilised this solution can now transition to the previous arrangement which allows for continued use of supplementary pension savings to pay down their mortgage. This applies to those who purchased their first property on 1 July 2014 or later and have been using supplementary pension savings to pay down their mortgage for 10 years, which is the maximum time allowed under the first-time buyers solution. Transitioning back to the older program enables people to continue paying down their mortgage for a longer period.
If you fall into this category, you can contact Skatturinn to switch to the older solution. You can call Skatturinn at +354 442 1000 or by email to adstod@leidretting.is.
We are also happy to help at Landsbankinn’s Investment Services. You can reach us by phone to +354 410 4040 or email to vl@landsbankinn.is.
