Read the whole thing at BBC:
"Police regret this incident and would like to extend their condolences to the family of the man," Icelandic police chief Haraldur Johannessen told reporters.
The incident was "without precedent" in Iceland, he said.
The apartment block was evacuated as neighbours were considered to be in danger.
Iceland, with a population of 322,000, has one of the lowest crime rates in the world and shooting incidents are unusual.
Counselling is being provided to the special forces team.