Bijleenregeling: The Equity Carry-Over Rule

Key Takeaways

• The bijleenregeling requires you to use your home equity (overwaarde) from a sale toward your next home purchase.
• If you take a larger mortgage than necessary (ignoring the equity), the interest on the excess is not deductible.
• The rule tracks your eigenwoningreserve — the equity built up from previous home sales.
• The eigenwoningreserve expires after 3 years if you do not buy a new home.
• This rule is designed to prevent homeowners from "cashing out" equity while maintaining full mortgage interest deduction.

What Is the Bijleenregeling?

bijleenregeling

The logic is straightforward: if you sell your home for €400,000 and your remaining mortgage was €250,000, you have €150,000 in equity. If you then buy a new home for €500,000, the government expects you to put the €150,000 toward the purchase. Your maximum deductible mortgage is €500,000 − €150,000 = €350,000. If you take a mortgage of €450,000, the interest on the extra €100,000 is not deductible.

How It Works: Step by Step

Step 1: Calculate Your Equity (Eigenwoningreserve)

When you sell your home:

Sale price − Remaining mortgage − Selling costs = Eigenwoningreserve

Example:

• Sale price: €450,000
• Remaining mortgage: €280,000
• Selling costs (agent, notary): €10,000
• Eigenwoningreserve: €160,000

Step 2: Calculate Maximum Deductible Mortgage

When you buy your new home:

Purchase price + Buying costs − Eigenwoningreserve = Maximum deductible mortgage (eigenwoningschuld)

Example:

• Purchase price new home: €550,000
• Buying costs (transfer tax, notary, mortgage advice): €15,000
• Eigenwoningreserve: €160,000
• Maximum deductible mortgage: €405,000

Step 3: Determine Deductible Interest

• If your actual mortgage is €405,000 or less → all interest is deductible
• If your actual mortgage is €500,000 → interest on €405,000 is deductible; interest on the remaining €95,000 is not deductible

The non-deductible portion is called the eigenwoningschuld bovenmatig (excess own-home debt).

Practical Example

Maria sells her apartment and buys a house.

Maria takes a mortgage of €450,000 (she wants a buffer for renovations).

• Deductible mortgage: €372,000 → interest is deductible
• Non-deductible excess: €78,000 → interest is NOT deductible

If Maria's mortgage rate is 4%, she loses the deduction on €78,000 × 4% = €3,120 per year. At a 36.97% effective deduction rate, that costs her approximately €1,154 per year in lost tax benefit.

The Eigenwoningreserve Over Time

Expiration: 3 Years

Your eigenwoningreserve expires if you do not buy a new eigen woning within 3 years of selling your previous one.

After 3 years:

• The eigenwoningreserve is set to zero
• You can take a full mortgage on your next purchase with full interest deduction
• This is useful if you rent for an extended period between purchases

Multiple Sales

If you sell multiple homes over time, the eigenwoningreserve accumulates:

1. Sell Home A → eigenwoningreserve of €100,000
2. Buy Home B using €80,000 equity → remaining reserve of €20,000
3. Sell Home B with additional €50,000 equity → new reserve of €70,000

The reserve tracks cumulative equity that has not been reinvested.

Negative Equity (Restschuld)

If you sell your home at a loss (remaining mortgage exceeds sale price), you have a restschuld (residual debt), not equity.

• The eigenwoningreserve is zero (it cannot be negative)
• Interest on the restschuld may be deductible for up to 15 years (if the sale occurred after October 28, 2012)
• This was a common situation after the 2008 financial crisis when many homeowners were "under water"

Tax Partners and the Bijleenregeling

If you buy and sell with a tax partner (fiscaal partner), the bijleenregeling is applied per person:

• Each partner has their own eigenwoningreserve (based on their share of the equity)
• Each partner's maximum deductible mortgage is calculated separately
• If one partner had a home before the relationship, only their equity is tracked

Strategies

Use Your Equity

The simplest approach: actually use your equity as a down payment on the new home. Take a smaller mortgage equal to or below the maximum deductible amount. This gives you full interest deduction and lower monthly payments.

Accept the Non-Deductible Portion

If you need a larger mortgage (e.g., for renovations), accept that the interest on the excess is not deductible. In some cases, the renovation adds enough value to justify the non-deductible cost.

Wait 3 Years

If you sell and plan to rent for more than 3 years before buying again, the eigenwoningreserve expires. This is not practical advice for most people, but it is technically an option.

Improve Instead of Move

If you are considering moving to a larger home, sometimes renovating your current home avoids the bijleenregeling entirely. The mortgage increase for renovation is fully deductible (as long as it is for the eigen woning and meets the post-2013 annuity/linear requirement).

Common Mistakes

1. Ignoring the bijleenregeling entirely — Some people sell at a profit, take a maximum mortgage on the new home, and assume all interest is deductible. It is not if they have unspent equity.
2. Not tracking the eigenwoningreserve — The reserve can persist for up to 3 years. If you buy a new home within that period, you must apply it. The Belastingdienst tracks this.
3. Spending equity on non-housing purposes — If you receive €150,000 in equity from a sale and spend it on a car and vacation, you still have a €150,000 eigenwoningreserve. The reserve is based on the equity amount, not what you did with the money.
4. Forgetting selling costs reduce the reserve — Estate agent fees, notary costs, and other selling costs reduce your eigenwoningreserve. Include them in the calculation.
5. Not claiming buying costs — Transfer tax, notary fees for the purchase, and mortgage advice fees increase your total acquisition cost, which increases the maximum deductible mortgage.

What to Read Next

• Mortgage Interest Deduction — The deduction rules in full
• Eigenwoningforfait — The other side of the eigen woning equation
• Hillen Amendment — Relevant when your equity means little to no mortgage
• Buying a Home: Overview — The complete picture