Why you owe more at closing than you expected — Calgary property taxes, TIPP, condo fees, and every line on your lawyer’s statement.
At your signing appointment your lawyer will hand you a statement of adjustments, and there is a good chance the bottom line is larger than the number in your head. The most common reaction is that someone has added fees.
Almost always, they have not. The statement exists to divide costs that were paid for a whole year between the person who owned the home for part of it and the person who owns it for the rest. If the seller has already paid this year's property taxes through December, you owe them for the portion of the year you will own the house. That is the entire concept.
The reason it lands hard in Calgary specifically is timing. Our tax year runs January to December, but bills go out in late May and are due at the end of June. Buy in July and the seller has already paid for the rest of your year. Buy in March and they have not paid at all, so the credit runs the other way.
What the statement is, and the Calgary property tax timing that catches nearly every buyer.
The statement has two columns. Debits are amounts you owe; credits are amounts already applied on your behalf. The purchase price is your largest debit. Your deposit and your mortgage advance are your largest credits. The difference — plus adjustments and legal fees — is your cash to close.
Everything is split at the possession date. Costs relating to the period before it belong to the seller; costs from that date forward belong to you. Your lawyer prorates each shared item by the exact number of days.
Your lawyer, using the contract, the tax roll, the condo estoppel certificate if applicable, and your lender's instructions. The seller's lawyer prepares a mirror-image version. The two firms reconcile before closing.
This is the meeting for it. Your lawyer can walk you through any line in about a minute. Querying an adjustment two weeks after possession is far more work for everyone and occasionally too late.
City of Calgary property taxes cover the calendar year, January 1 to December 31. Assessment notices arrive in January; tax bills are mailed in late May and are typically due at the end of June. That means for roughly five months of each year, taxes for the whole year are unpaid — and for the remaining seven, they are paid well in advance.
Say you take possession on August 1 and the seller paid the full year in June. They have paid for August through December — five months of your ownership. You reimburse them for those months on the statement of adjustments. On a home with $4,200 in annual taxes, that is roughly $1,750 added to your cash to close.
Take possession on March 1 and nobody has paid the year's taxes yet. The seller owes for January and February, so you receive a credit for their share — and then you pay the full bill when it arrives in June. The credit reduces your closing costs but the June bill is entirely yours to fund. Do not spend the credit and then be surprised in June.
The adjustment should be based on the actual current-year levy where it is known. Early in the year, before the levy is set, lawyers often estimate from the prior year and the statement may provide for a later adjustment. Ask which basis was used.
The City of Calgary's Tax Instalment Payment Plan lets owners pay property tax monthly by automatic withdrawal instead of in one June payment. Many Calgary owners are on it, and it changes how your adjustment is calculated — a seller on TIPP has paid only the instalments made to date, not the full year.
This is the part that goes wrong. A seller on TIPP who does not cancel the plan can continue having withdrawals taken for a property they no longer own, and the account gets tangled. The seller is responsible for cancelling, and their lawyer should confirm it — but it is worth having asked.
TIPP does not transfer with the property. If you want to pay monthly, you apply to the City yourself after possession, and there are timing rules about when you can join — joining later in the year may require a catch-up payment for the months already elapsed. Applying well before the June deadline is the simplest path.
Some mortgages include property tax in the payment, with the lender remitting to the City on your behalf. If yours does, do not also enrol in TIPP — you would be paying twice. Confirm with your lender which arrangement applies, because both buyer-paid and lender-paid structures are common in Calgary.
The biggest lines on the statement are the ones people read least carefully, because they assume they already know them. Check each against a document.
It should match the final agreed price in the contract, after any amendments from the inspection or the appraisal. A credit negotiated during conditions appears as its own line, not as a changed price, unless the contract was amended.
Every deposit paid shows as a credit to the buyer: the first on acceptance, any second deposit at condition removal. If a deposit was paid late or in a different amount than the contract said, it still shows at the amount actually received by the brokerage.
For a buyer, the new lender's funds appear as a credit. The figure is what the lender actually advances, which can be less than the approved amount once the lender deducts its own fees or an insurance premium. For a seller, the payout of the old mortgage appears on the other side, taken from the proceeds.
The last line is the balance: what the buyer must deliver to the lawyer, or what the seller receives. It is the only number most people look at. It is right only if every line above it is.
Every adjusted item is split between buyer and seller on a date. Which date, and how the days are counted, decides who pays for what.
In Alberta's standard contract adjustments are made as of the possession date, with the buyer responsible for that day onward. If possession and the completion of funds fall on different days, the contract says which governs, and the lawyers follow it.
Property tax is adjusted on a calendar year. Condo fees on the month. Rent, where a suite is tenanted, on the month as well. The lawyer takes the annual or monthly amount, works out the daily rate, and multiplies by the days each side is responsible for.
If possession slips by a week, every adjustment moves. The statement is reissued, and the amounts shift in the seller's favour for items paid in advance and in the buyer's favour for items paid in arrears. Read the reissued statement as carefully as the first.
If the buyer's funds arrive after the possession date, the contract usually entitles the seller to interest for the delay. It appears as a line on the final statement, and it is one more reason to deliver funds early.
Condo fees, utilities, negotiated credits, and a five-minute check before you sign.
Condo contributions are billed monthly and almost always paid at the start of the month. If you take possession on the 12th, the seller has paid for the whole month, so you reimburse them for the 12th onward — a small, straightforward line.
These are not routine and they are worth attention. Who pays a special assessment — and whether it is paid in full at closing or continues in instalments — depends on when it was levied and what your contract says. The estoppel certificate states the position for your specific unit. If a special assessment appears anywhere in your documents, ask your lawyer directly who is responsible for what.
After possession, arrange payment of condo fees with the management company — usually pre-authorized debit. The seller's arrangement ends with their ownership, and a missed first contribution starts your relationship with the corporation badly.
If the corporation has approved a fee increase effective shortly after your possession, the adjustment reflects the current fee but your actual cost will be the new one. The budget and minutes in the document package will have told you this was coming.
Electricity, natural gas, and water are typically handled by final meter readings rather than on the statement. The seller closes their accounts effective possession day and you open yours. Set this up before possession — and photograph the meters on possession day so you have your own record if a bill looks wrong.
Your deposit appears as a credit. It has been held in trust by the brokerage named in your contract since the beginning and is applied against the purchase price here.
If your mortgage's interest adjustment date differs from your possession date, a small interest amount may appear. This is normal and usually minor — your lender is squaring up interest between the advance and the start of your regular payment schedule.
Anything agreed during the transaction — a price adjustment for an inspection finding, a holdback, a credit toward repairs — appears here as a credit to you. Check that it is present and correct, at the amount you agreed. This is the most common genuine error on a statement of adjustments, and it is your job to catch it.
Find the cash-to-close figure first and compare it with what you were expecting. If it is materially different, work upward until you find the line that explains the gap. Usually it is the property tax adjustment.
Purchase price matches the contract. Deposit credited at the full amount you paid. Mortgage advance matches your approval. Property tax adjustment prorated from the correct date. Those four cover the great majority of the statement.
Every credit you negotiated should be there. Condo fees prorated from the right day. Legal fees at the quoted amount. Disbursements itemized rather than lumped into a single unexplained figure.
Your lawyer explains these all day. There is no such thing as a question too basic, and the signing appointment is precisely when to ask. If a number still does not make sense to you, call us — we read these constantly and we would rather look at it with you than have you sign something you do not understand.
Some homes carry items that must be adjusted and others that are simply handed over. Knowing which is which keeps surprises off the statement.
Gas, electricity and water are closed by the seller and opened by the buyer in their own names on the possession date. Each party deals with the utility directly, and nothing appears on the statement. The seller's final bill is theirs; the buyer's first bill starts at the meter reading they request.
Where a legal suite or a whole home is rented, the rent for the month of possession is prorated, and the tenant's security deposit, with the interest the law requires, is transferred to the buyer as a credit. The buyer takes on the obligation to return it; the seller gives up the cash.
A tank of heating oil or propane on an acreage is adjusted at the volume remaining and the current price. Firewood, water tanks and similar are only adjusted if the contract says so.
Alarm monitoring, lawn care, a water softener rental: if the contract transfers them, any amount paid ahead may be adjusted; if it does not, they are the seller's to cancel. Rented equipment like a hot water tank or furnace is a separate question, and its contract should be on the table before the offer, not at closing.
Not every dollar moves on possession day. Some is held in trust for a reason, and the statement shows it.
Where the seller agreed to complete work that is not done by possession, the lawyers hold an agreed amount from the proceeds until it is finished and confirmed. The statement shows the holdback; a later letter releases it. The amount is usually more than the estimated cost, to make finishing the work worth the seller's while.
If the Real Property Report is late or compliance is pending, the buyer's lawyer may hold back funds until it arrives. Title insurance sometimes replaces the holdback. Either way, it should be agreed in writing before closing, not improvised on the day.
A credit the seller gave in place of a repair appears as a credit to the buyer. Lenders limit how large a credit can be relative to the price, so a large credit may have been restructured as a price reduction instead, and the statement will reflect whichever was actually signed.
Where the seller is not a Canadian resident, a portion of the price is held until a clearance certificate is produced. It is a large line, it is required by law, and it is not negotiable between the parties.
Most resale homes are exempt from GST. New builds, substantially renovated homes and some land are not, and the statement looks different when tax is in play.
A newly built home sold by the builder, a home that has been substantially renovated, and bare land or commercial property can all attract GST. A used residential home sold by the person who lived in it is exempt, which is why most Calgary resale statements never mention it.
Builder contracts state whether the price includes GST. If it does, the builder's statement shows the tax and any rebate assigned to the builder. If it does not, the tax is added to the price on the statement, and it is a significant sum.
Buyers of a new home that will be their primary residence may qualify for a partial rebate of the GST, subject to price limits. Many builders apply the rebate at closing by having the buyer assign it to them. If the home is bought as a rental, a different rebate applies and it is claimed after closing, not on the statement.
Whether you will live in the home decides which rebate, if any, you can claim and whether it can be taken at closing. Answer accurately; the rebate is audited.
The statement does not end on possession day. Final bills arrive, tax notices come, and occasionally a line turns out to be wrong. Here is what to do.
If the sale closed before the year's taxes were billed, the estimate used on the statement may differ from the actual bill. The contract usually provides for a re-adjustment between the parties once the real figure is known. In practice small differences are ignored and larger ones are settled through the lawyers.
A fee increase that takes effect after the statement was prepared, or a special assessment levied in the window between contract and possession, can require a correction. Keep the statement and the condo corporation's notices together.
Statements are prepared by people. A wrong day count, a missed deposit, a condo fee from an old schedule. If a line looks wrong, call your lawyer the same week; corrections are routine when they are raised early and awkward when they surface months later.
The statement sets your cost base for tax purposes and documents what you paid or received. Keep it with the contract and the title for as long as you own the home, and after.
We tell our buyers what their adjustments are likely to look like before the signing appointment — especially the property tax line, which depends entirely on what month you take possession.
We read these constantly. If a number does not make sense — or a credit you negotiated is missing — we would far rather look at it with you than have you sign something you do not understand.
Book a CallThis guide is for general information only and is not legal, financial, insurance, inspection, tax, or condo document review advice.
Buyers and homeowners should seek advice from appropriate professionals — including their lawyer, mortgage professional, home inspector, insurance provider, qualified condo document reviewer, accountant where applicable, and REALTOR® — before making decisions or removing conditions.
Calgary Listings Group — no surprises at the signing table.
