@FerdousR
It depends on how you have elected to treat that interest in the meantime. If you can meet the tracing requirements, you have the option of treating that $100,000 of interest as an investment expense on your schedule E, and you could do that from the day you purchased the rental property. That does not require you to itemize your deductions on schedule A and is not limited by any of the schedule A limitations. However, once you decide that that mortgage was used for an investment, you are stuck with that choice and you can’t change the treatment of the debt to treat it as a home acquisition debt once you make the improvements to your personal home.
I can’t tell you whether it would be more to your advantage to treat the debt as an investment expense or a personal expense. If you have not filed your 2020 tax return you can decide when you file whether to treat the refinance as partly investment interest. If you already filed a tax return for 2020 and you treated the $100,000 of equity debt as an investment expense on schedule E and you now regret that and want to change to treat it as a personal mortgage on schedule A, you must file an amended return to change the status for May 17. (In this case, changing your choice means removing the loan as an investment expense but not adding it yet as a personal mortgage deduction because it does not yet qualify.)
