After selling your home, you can use the equity to finance a new property, save, invest, or pay off debts. Equity is the amount left over after deducting the remaining mortgage balance and selling costs from the sale price. How best to use this amount depends on your personal situation, your next housing plans, and your financial goals. In this article, we answer the most frequently asked questions about home equity, step by step.
How much equity do you have after selling your home?
Your equity is the sale price of your home minus the remaining mortgage balance and associated selling costs. If your home sells for €400,000, you still have €220,000 outstanding on your mortgage, and you pay €10,000 in real estate agent and notary fees, your equity is €170,000. This amount is paid out to you by the notary after the transfer.
The selling costs you deduct from the proceeds typically include:
- Real estate agent commission (usually 1% to 1.5% of the sale price)
- Notary fees for the deed of transfer
- Any early repayment penalties on the mortgage
- Costs for a property valuation or structural survey
It is wise to map out these costs in advance so you have a realistic picture of the net amount you will receive after the sale of your home. Also check with your mortgage lender whether an early repayment penalty applies if you pay off the loan sooner than planned.
Do you have to pay tax on the equity from your home?
In the Netherlands, you do not pay income tax on the equity itself at the time of sale. However, the bijleenregeling (reinvestment rule) applies: if you purchase a new home, you are required to reinvest the equity in it if you want to fully deduct the mortgage interest on your new loan. If you do not use the equity for a new home, you will lose part of your mortgage interest deduction.
If you put the equity into a savings account and do not use it directly for a new home, that wealth falls under box 3 of income tax. You will then pay wealth tax on the amount above the exemption threshold (in 2026, this exemption is set per person by the Dutch Tax Authority). Bear in mind that the box 3 levy has been subject to significant changes in recent years due to court rulings and new legislation.
Always seek advice from a tax specialist or mortgage advisor before making decisions. The rules surrounding the reinvestment rule and box 3 are technical and can have major financial consequences.
What are the most common ways to make use of home equity?
The most common ways to use equity after selling your home are: reinvesting in a new property, saving in a deposit or savings account, investing in stocks or real estate, or paying off other debts. The most suitable option varies by situation.
Here is an overview of the most popular options:
- Buying a new home: Contributing equity reduces your new mortgage and your monthly payments.
- Saving: Safe and liquid, but the return depends on the savings interest rate.
- Investing: Potentially higher returns, but also more risk and less liquidity in the short term.
- Paying off debts: Paying off consumer credit or a personal loan immediately saves on interest costs.
- Gifting or lending to children: Contributing to your children’s own home purchase, with attention to gift tax rules.
- Renovating or improving energy efficiency: If you buy a new home, you can use the equity for renovations or energy-saving measures.
What are the pros and cons of investing versus saving your equity?
Saving offers security and immediate access to your money, but yields less when interest rates are low. Investing offers potentially higher returns, but carries risk and is less flexible in the short term. The best choice depends on your time horizon, your risk tolerance, and whether you need the equity in the near future for a new home.
| Saving | Investing | |
|---|---|---|
| Return | Low to moderate | Potentially higher |
| Risk | Low | Moderate to high |
| Liquidity | High (immediately accessible) | Lower (depending on product) |
| Tax | Box 3 | Box 3 (or box 1 for real estate) |
| Best suited when | You need the money in the near future | You have a longer time horizon |
If you plan to buy a new home within a year, saving or using a deposit account is often wiser than investing. Stock market prices can fluctuate significantly in the short term, meaning you may end up with less than expected at an unfavorable moment. If you do not need the equity until further down the line, a diversified investment may yield more.
When is it a smart move to put equity into a new home?
It is a smart move to invest equity in a new home if it lowers your monthly payments, gets you a more favorable mortgage interest rate, or prevents you from losing part of your interest deduction under the reinvestment rule. The more equity you contribute, the lower the loan-to-value ratio of your new mortgage, which generally results in a lower interest rate.
There are situations where putting everything into the new home may be less obvious:
- If you want to maintain a financial safety net for unexpected expenses
- If mortgage interest rates are very low and investing is expected to yield more
- If you have renovation plans that require liquid funds
A mortgage advisor can help you calculate the optimal balance between your own contribution and the mortgage, taking into account the reinvestment rule and your personal financial situation.
What steps should you take after selling your home?
After selling your home, there are a number of concrete steps best taken in order. Start by receiving the net proceeds through the notary, then get a clear picture of your financial situation, and only then make a decision about how to use the equity.
- Receive the equity through the notary: After the transfer, the notary will transfer the net amount to your account.
- Check the reinvestment rule: Determine whether and how much you are required to reinvest in order to retain your interest deduction.
- Consult a mortgage advisor: Have the implications calculated for any new mortgage you may take out.
- Speak with a tax specialist: Especially if you plan to save or invest the equity temporarily, tax advice is valuable.
- Determine your strategy: Make a deliberate choice to reinvest, save, or combine both, based on your goals.
- Handle practical matters: Think about deregistering from your old address, moving costs, and any temporary accommodation.
How we help you sell your home
A strong sales strategy is the foundation for maximizing your equity. Urban Homies guides you from start to finish in selling your home, with an approach that includes:
- Valuation and market analysis: We thoroughly research market conditions and establish a realistic asking price that reflects current demand.
- Professional presentation: With professional photography and a tailor-made listing, we ensure your home stands out to the right buyers.
- Full support: From the initial strategy consultation to the signing at the notary and the aftercare that follows, we are by your side every step of the way.
Want to know what your home is worth and what you will have left after the sale? Contact us for a no-obligation conversation with one of our experts.
