Writing off interest paid on refi loan above original investment

[Jonathan St.Leger]

Let's say you have a property paid in full with a original cost basis of $1.2M and it is worth $2.2M and would like to do cash out financing at 70% LTV which would be $1.54M which leaves an amount of $340,000 above original investment. The question is, is the interest paid on that amount tax deductible going forward or must you split up the interest paid on loan between original amount invested and the equity taken out ?

Thanks for your help.