Investment property: Iceland

Updated 5 October 2026

Iceland is a small and expensive market, with almost all demand in and around Reykjavík.

Citizens of European Economic Area countries and people living in Iceland buy property on general terms. Everyone else needs a permit from the minister of justice under Act 19/1966 on the right of ownership of real property, according to the Government of Iceland.

Who needs a permit

A permit is required for a foreigner who does not live in Iceland and does not enjoy rights under the European Economic Area agreement. The ministry considers the purpose of the purchase: a home for your own use or business in the country is easier to justify than an investment for income. Buying property does not by itself give a right to live in Iceland.

Since 31 December 2020 UK nationals also need a permit. No permit is needed to lease a home for up to three years, or under a lease that can be terminated with less than one year's notice. A buyer from the European Economic Area files a declaration under Regulation 702/2002 with the contract instead of a permit.

A permit covers one specific property of up to 3.5 hectares, and the buyer may own no other property in Iceland. Without a business purpose the basis is a close connection with the country: marriage to an Icelandic citizen, another close family tie, or regular visits over many years. A business may get exemptions on size and number of properties, but never above 25 hectares.

What the purchase costs to complete

The main government charge is stamp duty on registering the contract. It is calculated not on the price but on the official property valuation: 0.8% for an individual and 1.6% for a company, according to the Icelandic government portal. On a first home purchase an individual pays half, 0.4%, according to the tax authority. On a flat with an official valuation of ISK 60 million, about $490,700, the duty for a private buyer is ISK 480,000, about $3,930. A lawyer or licensed real estate agent, who usually runs the deal in Iceland, is paid separately. Dollar amounts use the European Central Bank rate of 5 October 2026, rounded up.

How the purchase works

1. Permit. If you are not from the European Economic Area and do not live in Iceland, an application to the minister of justice.
2. ID number. An Icelandic ID number is needed to register the deal and for taxes.
3. Offer and contract. The buyer makes a written offer, and once accepted the contract is signed.
4. Registration. The contract is registered with the district commissioner and stamp duty is paid.
5. Handover. Final payment and handover of keys on the contract schedule.

Owner's taxes

The owner pays an annual property tax to the municipality, depending on the official valuation and the municipality. Rental income is taxed in Iceland, and a non-resident files a return on Icelandic income.

Risks

• A purchase without a permit by a foreigner outside the European Economic Area is invalid.
• Counting on residence for a purchase: no such route exists.
• High prices and a small market: selling outside the capital region can take time.

What we do

We check whether you need a permit, prepare the application to the minister of justice explaining the purpose, shortlist properties, run legal checks and support registration of the deal with locally licensed partners. If you also need residence, we say honestly on which basis it can be obtained.

What we do

• Property shortlist for your investment goal
• Legal due diligence on the property
• End-to-end transaction support
• Ownership structuring (company, trust)
• Property management and letting

See also

Company formation · Business account · Personal account · Country taxes · All country programs

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