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Iceland Property Tax Guide 2026

Iceland imposes an annual municipal property tax based on fire insurance value, plus transaction taxes on property transfers. Principal residences are exempt from capital gains tax.

Annual Property Tax

Municipalities levy an annual property tax of 0.625% to 1.65% of the property's fire insurance value (brunabótamat). The rate varies by municipality and property type:

Property Transfer Tax

A 0.4% transfer tax applies to the purchase price of real estate. This is paid by the buyer.

Stamp Duty on Mortgages

When registering a mortgage, a stamp duty of 1.65% of the loan amount is payable. This applies to both purchase mortgages and refinancing.

Capital Gains on Property

Gains on the sale of a principal residence are 0%. Second homes and investment properties are subject to 22% CGT on any gain.

Rental Income Tax

Rental income from property is taxed as ordinary income at progressive IIT rates (36.94–46.28%). Related expenses (maintenance, management, interest) are deductible.

Non-Resident Ownership

Non-residents may purchase property in Iceland, though there are restrictions on agricultural land. Non-resident property owners are subject to the same annual property tax and transaction taxes as residents.

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