Confused about deductibility of interest on tax return

[Nick Gallon Martin]

I bought vacant land, built a spec home and sold it to an end user. I know that interest on the acquisition loan can be included in the cost basis since it’s inventory. But what about the interest on a cash out refinance? Say my original loan was $500K, my cost basis with improvements is $1M and I cash out refinance with a $1M loan (can I include the interest of the new loan into cost basis since it’s reimbursing me my cost basis)? Confused how this works for tax purposes. ChatGPT tells me that the cash out proceeds even if only reimbursing myself is non deductible because the proceeds are not reinvested in property