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Real estate investment in Iceland

Foreigners can buy, lease and sell properties without restrictions in Iceland. The sale of land to foreigners is prohibited. The land on which the house stands can be taken on a long-term lease.

Statistics confirm the liquidity of investments: every quarter, residential real estate prices grow by an average of 2.5%. Five years ago, an apartment of 100 m² cost an average of €267,000, and today it is sold for €440,000.

€4,405 Average price per 1 m²
of housing in Iceland
2,5% Average price per 1 m²
increase per quarter
0,9—3,4% Buyers’ related expenses,
of the transaction amount

Cost of a 3-bedroom apartment in Iceland

€1 million

Penthouse in Reykjavik

€500,000

Attic apartment with an ocean view in Reykjavik

€300,000

Apartment in Reykjavik

What do investors buy?

The most expensive real estate in Iceland is in the capital, Reykjavik.

Apartments

  • penthouses
  • attic apartments
  • apartments

Houses

  • townhouses
  • villas
  • farms

Iceland residence permit or citizenship by real estate investment

Obtaining an Iceland residence permit or citizenship is not connected with purchasing real estate.

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Taxes and associated costs

Purchase
Ownership
Sale

Property buyers pay stamp duty and government fees. Associated costs range between 0.9% and 3.4% of the purchase agreement value. When buying an apartment worth €400,000, the investor will spend €404,000, including additional costs.

0.9—3.4% Of the contract value are related costs for the purchase of housing in Iceland
Purchase expenses
Stamp duty
0.8%
Registration fee

Depends on the transaction amount

0.1%
Agency fee

If a real estate agency is involved in the transaction

1.5—2.5%

Taxes

Owners of real estate in Iceland pay an annual municipal tax of up to 1.65% of the cadastral value. The tax rate depends on the municipality.

If the owner leases the property, they pay a 22% tax on rental income.

€1,212 Approximate annual costs for
maintenance of an apartment

Communal payments

Electricity, gas, water, heating, and garbage collection
€43—165 

per month

Internet, TV and telephone
€40—80 

per month

Real estate sellers pay a capital gains tax of 22% on the difference between the sale and purchase prices.

22% Capital gains tax on the sale of
real estate in Iceland
Expenses on the sale
Capital gains tax

Paid on the difference between the sale and
purchase prices

22%

Frequently asked questions

Can foreigners buy real estate in Iceland?

Foreign nationals who are domiciled in Iceland, as well as European Economic Area nationals, can buy, sell, or rent out real estate without restrictions. But the sale of land to foreigners is prohibited — the land on which the house stands can be long-term rented.

Other types of foreign nationals need to obtain a permit from the minister of justice for buying real estate in Iceland.

How much does an average house cost in Iceland?

The average cost of housing in the country is €4,405 per 1 m². The most expensive housing is in Reykjavik, the capital of Iceland, where the average cost is €6,200 per 1 m².

What tax do you pay when buying Iceland property?

Buyers of real estate in Iceland pay a stamp duty of 0,8%.

Property owners in Iceland also pay an annual municipal tax of up to 1,65% of the cadastral value of the property. The tax rate depends on the municipality.

How long does it take to buy a house in Iceland?

While each instant is unique, real estate buyers in Iceland should estimate a 3—4 week process, from searches for the best property to ownership registration. Note that foreign nationals that are not domiciled in Iceland, or are outside the European Economic Area, need to obtain a permit from Iceland’s minister of justice for buying real estate.