Can I rent out my summer house or flat as a short-term let?
Conditional — yes, you may do short-term letting, but only within tight limits and after registering. Under Act no. 85/2007 on restaurants, accommodation and entertainment, an individual may offer home-stay letting after registering themselves and the property with the district commissioner (sýslumaður). The limits are firm: at most 90 days per calendar year and at most ISK 2,000,000 in income — go over either and you need a full operating licence for accommodation. Registration covers your legal residence and one other property outside urban areas (e.g. a summer house). The registration fee is ISK 9,200 (2026). The myth is that Airbnb is free and unregistered — that is wrong: unregistered letting can bring fines of up to ISK 1,000,000 per breach. Income from home-stay within the limits is taxed as capital income with no deductions; go over the limits and it counts as a business.
📋 The rules
- An individual may offer home-stay letting after registering with the district commissioner under Act no. 85/2007; only individuals (not companies) may register home-stay.
- The limits are at most 90 days per calendar year and at most ISK 2,000,000 in income; go over either and you need an operating licence.
- Registration covers your legal residence and one other property outside urban areas (e.g. a summer house).
- The registration fee is ISK 9,200 (2026) and is paid during the registration process with the district commissioner.
- Income within the limits is taxed as capital income with no deductions and must be declared; over the limits it counts as a business.
🔓 Exceptions
- Companies and legal entities may not use home-stay — they must apply for an operating licence to sell accommodation.
- The second property you may register must be outside urban areas; a 2025 bill aims to confine urban short-term letting even more tightly to the legal residence.
- Go over 90 days or ISK 2,000,000 and it no longer counts as home-stay but requires a full operating licence and supervision as an accommodation provider.
⚠️ Penalties & fines
The biggest trap is thinking short-term letting is informal. Unregistered home-stay breaches Act no. 85/2007 and can bring fines of up to ISK 1,000,000 per breach, and the district commissioner can deregister home-stay and refuse a new registration the following year. Going over 90 days or ISK 2,000,000 without an operating licence makes the operation unlawful and exposes it to the same penalties. The hidden cost is fiscal: home-stay income is taxed as capital income with no deductions, and under-declaring can lead to surcharges and reassessment by the tax authority. Demands for an overnight-stay tax can follow, and a building association or ground-lease agreement can ban short-term letting, so you may breach the rules of the building even if the registration is in order. Finally, unlawful accommodation can affect your fire insurance and liability if a guest suffers loss, which multiplies the risk far beyond the fine itself.
📎 Official sources
- Ísland.is · home-stay letting (registration and rules) →
- Althingi · Act no. 85/2007 on restaurants, accommodation and entertainment →
- Sýslumenn (district commissioners) · home-stay and fees →
❓ Frequently asked
Do I have to register home-stay, or is Airbnb free?
You must register yourself and the property with the district commissioner before offering home-stay; Airbnb letting is not free and unregistered. Unregistered letting breaches Act no. 85/2007 and can bring fines of up to one million króna per breach, so registration is not optional.
What are the limits, 90 days or 2 million?
Both apply, and it is enough to go over either one to fall out of home-stay: at most 90 days per calendar year and at most ISK 2,000,000 in income. If the letting goes over either limit you need a full operating licence for accommodation instead of a simple registration.
Can I register my summer house for home-stay?
Yes, the registration covers your legal residence and one other property outside urban areas, which can be a summer house. The same 90-day and ISK 2,000,000 limits apply in total, and a property in an urban area that is not your legal residence does not fall within the allowance.
What does it cost to register home-stay?
The registration fee is ISK 9,200 in 2026 and is paid during the registration process on the district commissioner's website. Only individuals may register home-stay; companies and legal entities must apply for an operating licence to sell accommodation lawfully.
How is home-stay income taxed?
Income within the limits is taxed as capital income with no deductions allowed against it, and must be declared on your tax return. If the letting goes over 90 days or ISK 2,000,000 it counts as a business, and then different and stricter tax and licensing rules apply.
🔎 Common searches
What people search to land here:
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