Mastering the Statement of Adjustments: BC Broker Exam Walkthrough

Last updated: April 2026

For candidates preparing for the British Columbia real estate licensing exams, understanding the financial mechanics of closing a transaction is non-negotiable. While often referred to globally as a "settlement statement," in British Columbia, this critical document is known as the Statement of Adjustments. Mastering the settlement statement walkthrough is essential not only for passing the exam but for ensuring compliance with the Real Estate Services Act (RESA) and BC Financial Services Authority (BCFSA) guidelines. For a broader overview of your exam preparation, be sure to review our Complete BC Real Estate Broker Licensing Exam Exam Guide.

This article provides a comprehensive walkthrough of the Statement of Adjustments, detailing how debits, credits, and BC-specific taxes are calculated and presented to both buyers and sellers.

Understanding the Statement of Adjustments in BC

In British Columbia, the Statement of Adjustments is typically prepared by a Notary Public or a Real Estate Lawyer. It is a detailed financial accounting of the transaction, outlining exactly how much money the buyer needs to bring to closing and exactly how much the seller will receive.

Broker candidates must understand that there are technically two statements: the Buyer's Statement of Adjustments and the Seller's Statement of Adjustments. While they share common elements (like the purchase price and property tax prorations), they are distinct documents tailored to each party's financial obligations.

The Balance Rule: Debits vs. Credits

The fundamental rule of any settlement statement is that it must balance.

Debit: An amount owed by the party (increases the amount the buyer must pay, or decreases the amount the seller receives).
Credit: An amount owed to the party (decreases the amount the buyer must pay, or increases the amount the seller receives).

For the buyer, the total debits (purchase price, taxes, fees) minus total credits (deposits, mortgage proceeds) equals the Balance Due to Complete. For the seller, total credits (purchase price, prepaid taxes) minus total debits (mortgage discharge, real estate commissions) equals the Balance Due to Seller.

Key BC-Specific Closing Costs and Taxes

When walking through a settlement statement in British Columbia, several specific provincial and federal taxes must be accurately applied.

Property Transfer Tax (PTT)

The BC Property Transfer Tax is one of the most significant line items on a Buyer's Statement of Adjustments. It is calculated based on the fair market value of the property (usually the purchase price) using the following tiered system:

1% on the first $200,000
2% on the portion of the fair market value greater than $200,000 and up to $2,000,000
3% on the portion greater than $2,000,000
An additional 2% on the portion greater than $3,000,000 (often called the luxury tax)

Note: Foreign buyers or satellite families purchasing in specified areas of BC (like Metro Vancouver or the Capital Regional District) may also be subject to the 20% Additional Property Transfer Tax (Foreign Buyer Tax).

Goods and Services Tax (GST)

GST (5%) is generally applicable to newly constructed homes or substantially renovated properties in BC. It is crucial to identify whether GST is included in the purchase price or added on top, as this drastically alters the settlement statement. Resale homes are typically exempt from GST.

Typical Buyer Closing Funds Required ($800k Property)

Step-by-Step Adjustment Calculations

Adjustments are made to ensure that the buyer and seller only pay for the property expenses during the exact time they own the home. The Adjustment Date is the date the buyer assumes responsibility for the property (usually the same as the Possession Date).

Property Taxes

In BC, property taxes are typically due on the first business day of July and cover the calendar year (January 1 to December 31). How this is adjusted depends on the closing date.

Example Scenario: A property closes on August 15th. The annual property taxes are $3,650, and the seller has already paid them in full.

Total days in the year: 365
Seller's days of ownership (Jan 1 to Aug 14): 226 days
Buyer's days of ownership (Aug 15 to Dec 31): 139 days
Buyer's share: ($3,650 / 365) * 139 = $1,390

On the settlement statement, this $1,390 will appear as a Debit to the Buyer and a Credit to the Seller. For a deeper dive into municipal tax frameworks, see our guide on Property Tax Calculation Methods.

Strata Fees and Rent Prorations

If the property is a condo or townhome, strata fees must be adjusted. Because strata fees are paid monthly on the first of the month, a mid-month closing requires the buyer to reimburse the seller for the remaining days of that month.

Similarly, if the property is tenanted, collected rent and security deposits must be transferred. Security deposits (plus any legally required interest) appear as a Credit to the Buyer and a Debit to the Seller. To master these daily rate equations, review our Proration Calculations Step-by-Step guide.

Financing, Deposits, and Commissions

The handling of trust funds and financing is heavily tested on the BC Broker Exam due to RESA's strict trust accounting rules.

The Initial Deposit

The buyer's initial deposit, usually held in the real estate brokerage's trust account, appears as a Credit to the Buyer on their statement (because they have already paid this amount).

On the seller's side, the real estate commission is deducted from this deposit. The brokerage will transfer the deposit to the closing lawyer/notary, less the commission owed. The total commission is listed as a Debit to the Seller.

Mortgage Proceeds

If the buyer is obtaining a new mortgage, the loan amount provided by the lender appears as a Credit to the Buyer. Conversely, if the seller has an existing mortgage that needs to be cleared from the title, the payout amount (including any discharge penalties) appears as a Debit to the Seller. For more on financing structures, check out our article on Loan-to-Value and Down Payment Calculations.

Summary Walkthrough: The Buyer's Statement

To summarize, a standard Buyer's Statement of Adjustments in BC will look something like this:

Debits (What the buyer owes):
- Purchase Price
- Property Transfer Tax (PTT)
- Buyer's share of prepaid property taxes
- Buyer's share of prepaid strata fees
- Legal/Notary fees and disbursements
Credits (What the buyer has already paid or is receiving):
- Initial Deposit
- New Mortgage Proceeds

Total Debits - Total Credits = Balance Due to Complete. This is the exact amount the buyer must provide to their legal representative via bank draft to close the deal.

Frequently Asked Questions (FAQs)

1. Who is responsible for preparing the Statement of Adjustments in BC?

In British Columbia, the Statement of Adjustments is prepared by the legal representatives handling the conveyance—typically a Notary Public or a Real Estate Lawyer. However, real estate brokers must understand the document to explain it to clients and verify commission payouts.

2. How is the Property Transfer Tax (PTT) handled on the settlement statement?

The PTT is a provincial tax that appears strictly as a Debit on the Buyer's Statement of Adjustments. The seller does not pay PTT. The buyer's legal representative collects this amount as part of the "Balance Due to Complete" and remits it to the provincial government upon registering the transfer of title.

3. Are real estate commissions shown on the Buyer's Statement of Adjustments?

No. Real estate commissions are the responsibility of the seller (unless specifically contracted otherwise in a buyer agency agreement). Therefore, commissions and the applicable GST on those commissions appear as a Debit on the Seller's Statement of Adjustments.

4. What happens if property taxes haven't been paid by the seller yet?

If closing occurs before July (e.g., May 15th) and the seller has not yet paid the annual property taxes, the adjustment flips. The buyer will be responsible for paying the full tax bill in July. Therefore, the seller must give the buyer a Credit for the days the seller owned the property (Jan 1 to May 14). This appears as a Credit to the Buyer and a Debit to the Seller.

5. Does the buyer's mortgage amount include the CMHC insurance premium?

If the buyer has a high-ratio mortgage (less than 20% down payment), the CMHC (or Sagen/Canada Guaranty) insurance premium is typically rolled into the total mortgage amount. This total, inclusive of the premium, will appear as the mortgage Credit on the buyer's statement. However, the PST (Provincial Sales Tax) on that default insurance premium cannot be rolled into the mortgage and must be paid in cash at closing, appearing as a Debit.