diff --git a/modules/files.nix b/modules/files.nix
index a7fd67f57..3edd1f964 100644
--- a/modules/files.nix
+++ b/modules/files.nix
@@ -343,8 +343,13 @@ in
           # We therefore simply log the conflict and otherwise ignore it, mainly
           # to make the `files-target-config` test work as expected.
           if [[ -e "$realOut/$relTarget" ]]; then
-            echo "File conflict for file '$relTarget'" >&2
-            return
+            if [[ -d "$realOut/$relTarget" && $(realpath "$realOut/$relTarget") == $realOut && $recursive ]]; then
+                # exception: allow a "collision" for a recureively linked home *directory*
+                :
+            else
+                echo "File conflict for file '$relTarget'" >&2
+                return
+            fi
           fi
 
           # Figure out the real absolute path to the target.