Tax Consequences: Cash out refinancing on rental property

[Raghuraman Krishnamoorthi]

Hi,

 This is my first post to this forum, so apologies if this question has been previously asked:

I am currently converting my primary home into a rental (the property is listed for rent) . However, I would like to cash out on the equity on the home so that my mortgage payments offset the rental income going forward. The current mortgage is less than 50% of the property value.

For example, consider the following numbers:

- Property Value $500000

- Current Mortgage balance $200000

- Cash out refinance fror $300000 (with $100000 being the additional loan amount).

Can I deduct the interest payment on the entire $300,000 amount against my rental income in Schedule E? Or am I restricted to deducting income on $200,000?

Thanks!

Raghu