Buying property in Iceland

Who can buy in Iceland

There are no restrictions on who can buy property in Iceland, but non-residents from outside the EEA need to gain approval from the Ministry of Justice in Iceland and a residence permit if they plan to stay for more than three months.

You’ll also need an Icelandic identification number, known as a ‘kennitala’, to buy property in Iceland.

The buying process in Iceland

• Once you’ve found the property you’d like to buy, make an offer to the seller.
• If the seller accepts, both parties sign a legally binding purchase contract, called a ‘kaupsamningur’, in front of a notary.
• This contract outlines the price, terms, and sale conditions, and is accompanied by a 10% deposit.
• Next, the final deed of sale, called an ‘afsal’, is signed in front of a notary, which signifies the transfer of ownership.
• The deed must then be registered at the District Commissioner’s office.

Fees and taxes in Iceland

• Stamp duty for individuals is 0.8% of the property’s value, which falls to 0.4% for first-time buyers and rises to 1.6% for legal entities or companies.
• Registration fees are roughly 0.1% of the property’s value and paid to the district commissioner.
• Property tax varies by municipality and is levied on the cadastral value of the property, ranging from 0.18% to 1.65%.
• If you rent your property, you’ll be subject to a 22% rental income tax; however, if you rent more than two properties, 50% of the gross rental income is exempt from tax.