Read the facts before calculating
These are explicit study assumptions, rather than standard fees or a model settlement statement. Actual contracts, loan programs, and closing instructions can allocate charges differently.
- A fictional purchase closes October 30, 2026 for $425,000. The new loan is $340,000 and the buyer has already deposited $10,000. No existing debt is assumed.
- The seller's payoff is $250,000. For this exercise only, the negotiated brokerage fee is 5% of price. Other seller costs are $2,000, and the seller gives the buyer a $3,500 credit.
- The buyer pays a 1% origination charge on the loan, $3,500 in other costs, and $1,200 in prepaid items. Those amounts exclude the taxes and charges separately listed here.
- The new secured note is taxable for intangible recording tax: some principal is due more than 62 months after its date. No exemption applies. The seller pays transfer tax and the buyer pays intangible recording tax under this hypothetical contract.
- Annual property tax is $3,650 and is unpaid. Use actual/365, with the seller owning the closing day: January 1 through October 30 is 303 days. The buyer will pay the full bill later. No other entries apply.
Try the six exercises
Write your own setup before opening an answer. For every credit, identify the matching debit or the funds already supplied.
1. Calculate transfer tax, intangible recording tax, and the origination charge. Which base does each use?
Check answer and reasoning
$425.00 transfer tax on price; $1,020.00 intangible recording tax on the qualifying note; $3,400.00 origination charge on the loan.
Transfer tax: $1 + (($425,000 - $1,000) / $100 × $0.10) = $425. Intangible tax: ($340,000 / $500) × $1.50 = $1,020. Origination: $340,000 × 1% = $3,400.
2. Calculate the seller's property-tax share and enter its debit and credit.
Check answer and reasoning
$3,030.00: debit seller, credit buyer.
$3,650 / 365 = $10 per day. Multiply by 303 seller days. The buyer receives the credit because the buyer will pay the full unpaid bill later. This is not an additional payment to the tax authority at this closing.
3. Calculate the seller's net after payoff, commission, costs, credit, and tax entries.
Check answer and reasoning
$144,795.00
$425,000 - $250,000 - $21,250 - $2,000 - $3,500 - $425 - $3,030 = $144,795. The buyer's deposit is part of the price, not a second seller deduction.
4. Calculate the buyer's new cash still due, after the loan, deposit, and credits.
Check answer and reasoning
$77,590.00
$425,000 - $340,000 + $3,400 + $1,020 + $3,500 + $1,200 - $10,000 - $3,500 - $3,030 = $77,590. Apply the deposit once, and apply both buyer credits.
5. Reconcile the transaction: do cash sources equal disbursements and prepaid items?
Check answer and reasoning
Both equal $427,590.00.
Sources: $340,000 loan + $10,000 deposit + $77,590 new buyer funds. Uses: $144,795 seller net + $250,000 payoff + $21,250 commission + $2,000 seller costs + $425 transfer tax + $3,400 origination + $1,020 intangible tax + $3,500 buyer costs + $1,200 prepaids. The seller credit and tax proration are transfers between the parties, not extra third-party disbursements.
6. Change one fact: the seller credit rises by $1,000. What happens to seller net and buyer cash?
Check answer and reasoning
Seller net falls to $143,795; buyer cash falls to $76,590.
The additional seller-paid credit reduces each figure by $1,000. With other charges unchanged, both cash sources and total uses fall by the same amount. Actual loan programs can limit credits; this exercise assumes the stated credit is permitted.
Open the completed buyer and seller ledgers
| Entry | Amount |
|---|---|
| Sale price | $425,000.00 |
| Loan payoff | - $250,000.00 |
| Negotiated commission | - $21,250.00 |
| Other seller costs | - $2,000.00 |
| Seller credit | - $3,500.00 |
| Transfer tax | - $425.00 |
| Unpaid tax proration | - $3,030.00 |
| Seller net | $144,795.00 |
| Entry | Amount |
|---|---|
| Price less loan | $85,000.00 |
| Origination charge | + $3,400.00 |
| Intangible recording tax | + $1,020.00 |
| Other buyer costs | + $3,500.00 |
| Prepaid items | + $1,200.00 |
| Deposit already paid | - $10,000.00 |
| Seller credit | - $3,500.00 |
| Unpaid tax credit | - $3,030.00 |
| New buyer cash due | $77,590.00 |
Why the two taxes use different numbers
Georgia transfer tax follows taxable consideration, while intangible recording tax follows a qualifying secured note. The DOR recording-date guidance explains the 62-month definition used here.
Need a smaller step first? Review buyer funds at closing, debits and credits, or calendar-day proration.
Apply the rules to fresh finance and closing questions →