Netherlands Mortgage and Home Ownership Tax Guide

Hypotheekrenteaftrek — Mortgage Interest Deduction

• Deduction at marginal rate (up to 49.5%): The hypotheekrenteaftrek allows homeowners to deduct the mortgage interest paid on the eigen woning (principal residence) from their box 1 taxable income. The deduction is at the marginal tax rate (49.5% for high earners, 37.48% for the second bracket). The deductibility is being gradually reduced: the mortgage interest deduction rate is limited to the highest tax bracket rate (49.5% in 2026) but this rate is scheduled to be reduced by 3%-points per year until reaching 37% in 2036 (the overdrachtsbelasting-reductie plan). In practice: a homeowner with a €300,000 mortgage at 4% interest pays €12,000 interest and receives ~€5,940 back at 49.5% — net interest cost of ~€6,060.
• Conditions for deductibility: The mortgage interest is deductible only if: (a) the mortgage is used to finance the acquisition, maintenance, or improvement of the eigen woning (overfinanciering — financing for other purposes is not deductible), (b) the mortgage is repaid at least on an annuity or linear basis within 30 years (the 30-jaars hypotheek — interest-only mortgages taken out after 2013 do not qualify for interest deduction), (c) the mortgage is not fully interest-only after 2013 (only the portion of the loan that is repaid annuity/linear qualifies), (d) the mortgage is registered with the Kadaster (the Dutch land registry), and (e) the mortgage meets the AFM (Autoriteit Financiële Markten) regulatory requirements.
• Overfinanciering — excess borrowing: If the mortgage exceeds the acquisition cost plus improvements (overfinanciering), the interest on the excess portion is not deductible. The owner-occupied value (WOZ) is the maximum for deductibility — borrowing above the WOZ value for other purposes (buying a car, investing) creates non-deductible interest.

Eigenwoningforfait — Deemed Rental Value

• Positive income addition: The eigenwoningforfait is a positive income item in box 1 — the homeowner adds a percentage of the WOZ value to taxable income as a deemed benefit from living in the property. The percentage in 2026 is approximately 0.35% of the WOZ value (for properties with WOZ between €75,000 and €1,280,000). For a property with WOZ €500,000: the eigenwoningforfait is ~€1,750 added to taxable income. At 49.5%: the tax cost is ~€866 per year.
• Hillenwet phase-out (volledig afgeschaft): The Hillenwet (which exempted the eigenwoningforfait for homeowners with a low or no mortgage) has been fully phased out as of 2024 (the 30-year phase-out from 2008–2037 was completed early). All homeowners now pay the full eigenwoningforfait — there is no relief for mortgage-free homeowners. This was a major change that increased the tax burden on mortgage-free retirees.

NHG — Nationale Hypotheek Garantie

• State mortgage guarantee: The NHG (Nationale Hypotheek Garantie) is a state guarantee on the mortgage loan. If the homeowner is forced to sell the property at a loss (due to divorce, unemployment, disability, or death of a partner), the NHG covers the remaining debt up to the NHG limit (approximately €435,000 in 2026, higher for energy-efficient homes). The homeowner pays a one-time fee of approximately 0.6% of the loan amount at origination. The NHG makes it easier to obtain a mortgage (lower interest rate, no risk surcharge) and provides protection against residual debt.
• Tax treatment: The NHG fee (borgtochtprovisie) is not deductible for income tax purposes (it is a one-time cost, not interest). The guarantee itself has no direct tax implications — the mortgage remains deductible if it meets the annuity/linear repayment conditions.

Overdrachtsbelasting — First-Time Buyer Exemption

• First-time buyers under 35 — 0%: Buyers under the age of 35 who purchase their first home (their first eigen woning) are exempt from overdrachtsbelasting (0% instead of 2%). The exemption applies to purchases up to €510,000 (2026). Conditions: (a) the buyer must be between 18 and 35 at the time of the notarial deed, (b) the property must be the buyer's principal residence (the buyer must live in it within 2 years), (c) the buyer must not have claimed the exemption before (the exemption is a once-in-a-lifetime benefit), and (d) the purchase price must not exceed €510,000. The exemption is a major benefit — it saves up to €10,200 on a €510,000 purchase.

Eigenwoningreserve — Home Equity Reserve

• Equity rollover: When a homeowner sells their previous home and buys a new one, the eigenwoningreserve (home equity reserve) is created. If the sale proceeds (after repaying the old mortgage) exceed the purchase price of the new home, the surplus (the overwaarde — excess equity) is added to the eigenwoningreserve. The reserve reduces the mortgage interest deduction on the new home — the homeowner is deemed to have used the equity to finance the new home. The reserve is calculated automatically by the Belastingdienst when the homeowner files the annual tax return.
• Aflossingseis (repayment requirement): Since 2013, new mortgages must be repaid on an annuity or linear basis within 30 years to qualify for interest deduction (aflossingseis — the repayment requirement). This means the mortgage balance decreases over time, gradually reducing the mortgage interest deduction. The homeowner's monthly mortgage payment (interest + principal repayment) remains stable (annuity) or decreases (linear).

For the property transfer process (notarial deed, Kadaster registration, WOZ objections), see our Property Tax Guide →. For buy-to-let mortgages and investment property taxation, see our Real Estate Investment Guide →. For mortgage types, interest rates, and lender comparison, see the AFM mortgage portal.