Courtney and Nikki each own investment realty that they would like to trade. Courtney's property is subject to mortgage debt of $10,000, and its appraised fair market value is $25,000. Nikki's property is subject to mortgage debt of $17,000, and its appraised fair market value is $25,000. Courtney and Nikki agree to exchange the properties and assume each other's debt. To complete the exchange, who pays cash and how much will that person have to pay?

Question

Quizplus · Accepted Answer

Nikki pays $7,000 because the difference in mortgage debt assumed by Courtney ($17,000) and Nikki ($10,000) is $7,000.

Courtney and Nikki Each Own Investment Realty That They Would