Home equity from the sale of your property is the difference between the selling price of your home and the remaining mortgage balance. If your home sells for more than you still owe the bank, you keep that difference after the sale. Home equity can be a significant financial windfall, but it’s useful to understand how to handle it.
In the Netherlands, home prices have risen sharply in recent years, meaning many homeowners have built up considerable equity. This article answers the most frequently asked questions about home equity: from how it’s calculated and taxed to smart ways to put the proceeds to work when buying a new home.
How do you calculate your home equity?
You calculate your home equity by subtracting your remaining mortgage balance from the current market value of your property. The formula is straightforward: market value minus remaining mortgage = home equity. If your home is worth €450,000 and you still owe €200,000 on your mortgage, your equity is €250,000.
To determine a reliable market value, you can have a real estate agent carry out a valuation or hire a certified appraiser. An online home value tool provides a rough estimate, but a professional appraisal gives you a more accurate picture — especially if you plan to use your equity for a new purchase or mortgage application.
When calculating your equity, also factor in selling costs that will be deducted from the proceeds:
- Real estate agent commission (typically a percentage of the selling price)
- Notary fees for the transfer of ownership
- Any costs for an energy certificate or structural survey
- Early repayment penalties if you pay off your mortgage before the agreed fixed-rate period ends
Your net equity is what remains after all these costs have been deducted. That figure is the actual amount you can freely use after the sale.
What happens to your equity after the sale?
After your home is sold, the equity is paid out through the notary. The notary first settles the remaining mortgage balance and any selling costs, after which the remaining amount is transferred to your account. What you do with that money is largely up to you.
The most common choices are:
- Putting it toward a new home as a down payment, which reduces the amount you need to borrow and lowers your monthly payments
- Saving or investing if you’re renting temporarily or not buying a new home right away
- Paying off other debts to strengthen your financial position
Are you buying a new home within three years? Then the bijleenregeling (home equity reinvestment rule) applies. This rule requires you to put your equity toward the purchase of a new home if you want to continue deducting mortgage interest on the full loan amount. If you don’t, you lose part of your mortgage interest deduction.
Do you have to pay tax on home equity?
In the Netherlands, you do not pay income tax on home equity at the time of sale. The profit you make from selling your primary residence is exempt from tax. You don’t need to worry about the Dutch Tax Authority claiming a portion of your sale proceeds.
There are, however, two situations where tax can indirectly come into play:
The home equity reinvestment rule and mortgage interest deduction
If you don’t invest your equity in a new home, you can no longer deduct mortgage interest on the portion you didn’t reinvest. This isn’t a direct tax on your equity, but it can increase your net monthly costs. A mortgage advisor can help you plan this wisely.
Equity held in a savings or investment account
If you deposit your equity into a savings or investment account, the assets fall under Box 3 of the Dutch income tax system. Above the tax-free threshold, you will owe wealth tax. In 2026, the tax-free allowance is approximately €57,000 per person. If you exceed that amount, you pay tax on the deemed or actual return on those assets.
Can you access your home equity without selling your home?
Yes, it is possible to tap into your home equity without selling. The most common method is increasing your mortgage, also known as a second mortgage or mortgage top-up. You borrow additional funds based on the increase in your home’s value.
Other options include:
- Equity release mortgage: designed for older homeowners who want to convert their equity into monthly payments or a lump sum without moving
- Revolving credit secured against the property: some lenders offer this for renovations or major expenses
Keep in mind that increasing your mortgage brings new financing costs. The bank will reassess your income and the current value of your home. There are also legal limits on the maximum mortgage relative to the property’s value (the loan-to-value ratio). In 2026, the maximum you can borrow in the Netherlands for a standard mortgage is 100% of the property’s value.
What is a realistic level of home equity in today’s housing market?
A realistic equity figure depends heavily on when you bought your home, where in the country you live, and how the market has developed. In urban areas such as Amsterdam, homeowners who have lived in their property for five years or more often hold substantial equity, driven by strong price growth.
There is no fixed benchmark for what constitutes “good” equity, but a few reference points help put it in perspective:
- Owners who bought in a popular city more than ten years ago have in many cases built up tens to hundreds of thousands of euros in equity
- In regions with more modest price growth, equity is smaller but still typically positive
- Recent buyers have had less time to build equity and may in some cases even be in negative equity if the market temporarily declines
Have a professional valuation carried out to get a realistic picture of your specific situation. A current appraisal gives you the most reliable basis for making further decisions.
When does it make sense to use your equity toward a new home?
Using your equity when buying a new home is a smart move if it reduces your mortgage costs, increases your borrowing capacity, or helps you secure a better interest rate. The more of your own money you put in, the less you need to borrow and the lower your monthly payments will be.
Specific situations where strategically deploying your equity makes sense:
- You want to buy a more expensive home that’s just beyond your borrowing capacity: equity bridges the gap
- You want lower monthly payments: a larger down payment means a smaller mortgage and less interest paid over the term
- You want to renovate or make your home more energy-efficient: equity can serve as your own contribution toward improvements that add value to the property
- You want to secure a better fixed-rate period: a low loan-to-value ratio gives you access to more favorable interest rates
If you wait more than three years before buying a new home, the equity reinvestment rule no longer applies and you are free to use your equity however you choose. If you buy within three years, it’s worth discussing with a mortgage advisor in advance how to deploy your equity in the most tax-efficient way.
How we help you sell your home
A strong selling strategy starts with an accurate valuation and a clear picture of your equity. At Urban Homies, we guide you through the entire sales process from start to finish, ensuring you get the maximum return from your property. We do this by:
- Conducting a professional valuation based on current market data in your area
- Developing a tailored marketing strategy with professional photography and targeted advertising
- Carrying out thorough due diligence on market conditions to determine the right asking price
- Guiding you through negotiations and the final settlement with the notary
- Providing aftercare following the sale, so you’re well prepared for your next step
Want to know what your home is worth and how much equity you can expect? Visit our sales support page or get in touch for a no-obligation conversation. We’re happy to think it through with you.
