Closing statements: debits and credits for buyer and seller

Read each party's side separately

A closing statement accounts for the purchase price, financing, adjustments, and expenses. A buyer debit increases the amount the buyer must provide; a buyer credit reduces it. A seller credit increases the seller's proceeds; a seller debit reduces them. Thus buyer cash due equals buyer debits minus buyer credits, while seller proceeds equal seller credits minus seller debits.

The sale price is a buyer debit and a seller credit. A $300,000 price therefore adds $300,000 to buyer debits and $300,000 to seller credits. It is not the seller's net proceeds.

Funding and charges

A $240,000 new loan funded into closing is a buyer credit. A $10,000 earnest-money deposit already held and applied at closing is another buyer credit. Neither creates an additional seller credit on top of the price: they fund payment of that price. With $300,000 in buyer debits and $250,000 in credits, the buyer brings $50,000.

A seller's $180,000 existing mortgage payoff is a seller debit paid to the lender, not a buyer credit. A $15,000 seller-paid commission is also a seller debit paid to a third party. With no other adjustments, seller proceeds are $300,000 minus $180,000 minus $15,000, or $105,000. A $2,000 buyer loan fee paid at closing adds a buyer debit, making buyer cash due $52,000; it creates no seller credit.

Adjustments between the parties

When the buyer assumes $180,000 of the seller's debt as part of the price, record a buyer credit and seller debit of $180,000. The seller does not receive that portion in cash. Do not also treat the assumed balance as a cash payoff.

If the buyer will pay an unpaid property-tax bill that includes $900 attributable to the seller, debit the seller and credit the buyer $900. If the seller prepaid an expense and $300 benefits the buyer, debit the buyer and credit the seller $300. A $1,000 seller allowance similarly debits the seller and credits the buyer $1,000. These paired entries shift a cost between parties; third-party charges need not have an opposite entry on the other party's side.

Use the contract's allocation and the stated proration convention, including who owns closing day; customs do not replace those instructions.

Florida taxes and itemization

Florida Statutes section 201.02(1)(a) states the general deed documentary stamp rate of seventy cents per $100 of consideration; county-specific treatment must be identified before using a rate. Given a transaction subject to that general rate, $300,000 divided by $100 times $0.70 equals $2,100. If the contract assigns this tax to the seller, debit the seller $2,100, with no buyer credit: payment goes to the taxing authority. Seller proceeds in the earlier example become $102,900.

Under the federal Real Estate Settlement Procedures Act, section 2603(a), the settlement disclosure clearly itemizes borrower and seller charges and identifies whose interest a title insurance premium insures. Itemization supports checking each charge, its payer, and its effect on the final balance.