K Purchased Her Residence Several Years Ago for $80,000

K purchased her residence several years ago for $80,000.The current balance of her mortgage loan is $60,000.During the year, she borrowed $125,000 from a savings and loan, and secured the loan with a second mortgage on her home, now worth $240,000.She may deduct the interest on the entire amount of debt related to her home if she uses the proceeds of the new loan to make permanent home improvements.