Stella purchased her primary home in 2015 for a price of $2,000,000. She borrowed $1,000,000 to enable the purchase. The loan is secured by the house. The interest rate on the loan was set at 5% simple. When the remaining balance was $600,000, she refinanced the loan on January 1, 2023 since interest rates were at a low and the value of the house had increased to $3,000,000. She was able to acquire a new loan of $900,000 at a rate of 3% simple. The new loan went to pay-off the remaining $600,000 balance. The remaining $300,000 of the new loan she kept in her bank to assist with her living expenses. The interest that will be incurred in 2023 for the new loan is $ 27,000 interest. Please discuss the federal income tax consequences in 2023 of the above transactions.