How much interest can Patricia deduct on her taxes for the mortgage and home equity loan?

When determining how much interest Patricia can deduct for mortgage and home equity loans, it's essential to understand the IRS regulations regarding mortgage interest deductions. For tax purposes, a taxpayer can typically deduct interest paid on qualified residence loans, including both primary mortgages and home equity loans, up to certain limits.

The Tax Cuts and Jobs Act of 2017 made significant changes to the mortgage interest deduction, limiting the amount of eligible interest for new loans taken out after December 15, 2017. For mortgage interest deductions, the total amount of qualified residence loans was capped at $750,000 for married couples filing jointly.

Assuming that Patricia's mortgage and home equity loan fit within these parameters and that she has accrued a total of $7,000 in mortgage interest this tax year, she will be able to deduct this full amount on her tax return.

Therefore, the deduction of $7,000 is in line with the specified amounts of interest she's paid and meets the IRS guidelines. This understanding clarifies why the answer specifying $7,000 as the deductible interest is correct.