Alberta Broker Exam Guide: Closing Costs Breakdown

Last updated: April 2026

As a candidate preparing for the Alberta real estate broker licensing process, mastering the financial mechanics of a real estate transaction is non-negotiable. Brokers are not only responsible for their own transactions but are also held accountable by the Real Estate Council of Alberta (RECA) for the competence of the associates registered to their brokerage. Understanding how to accurately calculate and explain closing costs is a fundamental competency tested on the exam.

This mini-article provides an in-depth look at the closing costs breakdown specific to Alberta. For a broader overview of the licensing process, be sure to review our Complete Alberta Real Estate Broker Exam Exam Guide.

The Broker’s Regulatory Responsibility

Under the Real Estate Act Rules, real estate professionals must provide competent service. This includes giving clients a reasonably accurate estimate of the costs they will incur to close a transaction. As a broker, you must ensure your brokerage policies dictate that associates provide written estimates of buyer or seller expenses prior to the execution of a purchase contract.

Failing to properly advise a client on closing costs—such as unexpected municipal compliance fees or mortgage penalties—can lead to transaction collapse, civil liability, and disciplinary action from RECA.

Breakdown of Buyer Closing Costs in Alberta

Alberta is unique compared to other Canadian provinces because it does not levy a provincial Land Transfer Tax (LTT) or provincial sales tax (PST). However, buyers still face a variety of specific closing costs.

Alberta Land Titles Office (ALTO) Fees

Instead of a land transfer tax, Alberta charges registration fees based on the property's value and the mortgage amount. The exam frequently tests your ability to calculate these fees. The standard formula is:

Property Transfer Registration: $50 base fee + $2.00 for every $5,000 of property value (or portion thereof).
Mortgage Registration: $50 base fee + $1.50 for every $5,000 of the mortgage amount (or portion thereof).

Exam Scenario Example: A buyer purchases a home for $500,000 with a $400,000 mortgage. What are the total ALTO fees?

Transfer Fee: $50 + (($500,000 / $5,000) × $2) = $50 + $200 = $250
Mortgage Fee: $50 + (($400,000 / $5,000) × $1.50) = $50 + $120 = $170
Total ALTO Fees: $420

Legal Fees and Disbursements

Buyers must retain a real estate lawyer to handle the conveyance. Legal fees typically range from $1,200 to $2,500, plus disbursements (couriers, ALTO search fees, etc.).

Title Insurance vs. Real Property Report (RPR)

While the seller typically provides an RPR in Alberta, a buyer's lender may still require Title Insurance to protect against undiscovered defects, survey errors, or fraud. Title insurance is a one-time premium usually ranging from $250 to $500.

Breakdown of Seller Closing Costs in Alberta

Sellers generally bear the heavier burden of closing costs, primarily due to brokerage commissions. Brokers must understand how these costs are structured and disbursed.

Real Estate Brokerage Commissions and GST

Commissions in Alberta are highly negotiable and must never be presented as a "fixed" or "standard" board rate, as this violates the Competition Act. However, a common structure you will see in practice (and potential exam scenarios) is 7% on the first $100,000 and 3% on the balance of the sale price.

Because Alberta has no PST, only the 5% federal Goods and Services Tax (GST) is applied to the commission.

Real Property Report (RPR) and Municipal Compliance

Under the standard Alberta Real Estate Association (AREA) Residential Purchase Contract, the seller is obligated to provide a current RPR with evidence of municipal compliance. If the seller does not have one, obtaining a new survey and compliance stamp can cost between $600 and $1,200. If there are unpermitted structures, the costs (and delays) can escalate significantly.

Mortgage Discharge Fees and Penalties

If the seller is paying off a mortgage, they will incur a discharge fee (usually $200 to $400) and potentially a prepayment penalty (which can be three months' interest or the Interest Rate Differential, whichever is greater).

Typical Seller Closing Costs ($500,000 Home - Assuming 7% on 1st $100k, 3% on balance)

The Statement of Adjustments: A Broker’s Perspective

The Statement of Adjustments is a critical document prepared by the lawyers that outlines the final flow of funds. As a broker managing a trust account, you must understand how adjustments affect the final payout.

Property Tax Adjustments

Property taxes in Alberta are typically billed mid-year but cover the calendar year (January 1 to December 31). The adjustment ensures the seller only pays for the days they owned the property.

Formula Rule: The buyer is responsible for the taxes on the closing date. If the seller has already paid the annual taxes, the buyer must reimburse the seller for the days from the closing date to December 31.

Handling the Deposit

The initial deposit is held in a brokerage trust account. On the Statement of Adjustments, this deposit is credited toward the buyer's purchase price. Before sitting for your exam, ensure you thoroughly understand the rules surrounding trust accounts by reading our guide on Earnest Money and Escrow.

Exam Preparation Strategies

When studying for the broker exam, do not just memorize the costs; understand who is responsible for them under the standard AREA contract and how to calculate them. Be prepared for situational questions where a client disputes a fee or an associate provides an inaccurate estimate.

To optimize your study sessions, we highly recommend reviewing the Best Study Materials and Resources. Furthermore, understanding the exam structure will help you pace your math calculations. Check out our breakdown of How Many Questions and Time Limit to build your time-management strategy.

Frequently Asked Questions (FAQs)

Does Alberta have a Land Transfer Tax?

No, Alberta does not have a provincial Land Transfer Tax. Instead, the province charges a much lower Alberta Land Titles Office (ALTO) registration fee based on property value and mortgage amount.

Who pays for the Real Property Report (RPR) in Alberta?

Under the standard AREA Residential Purchase Contract, it is the seller's responsibility to provide and pay for a current RPR with municipal compliance, unless the buyer and seller explicitly negotiate otherwise.

Is GST payable on residential home sales in Alberta?

GST is generally not payable on the purchase price of used residential housing. However, GST (5%) is applicable to newly constructed homes, substantially renovated homes, and all real estate services, including brokerage commissions and legal fees.

How is the property tax adjustment calculated if closing is on July 1st?

In Alberta, the buyer is responsible for the property on the closing date. Therefore, the seller pays for January 1 through June 30 (181 days, or 182 in a leap year). The buyer pays for July 1 through December 31. The exact financial adjustment depends on whether the seller has already paid the municipality for the full year.

Can closing costs be rolled into the mortgage in Alberta?

Generally, closing costs (like legal fees, ALTO fees, and tax adjustments) cannot be rolled into the mortgage and must be paid out-of-pocket by the buyer. The only exception is the CMHC mortgage default insurance premium, which is typically added to the total mortgage principal.