Investment interest is a deductible expense against investment income.
However, the burden of proof for any expense or deduction is always on the taxpayer, not the IRS.
In the case where one loan is used for a mixed purposes, partly investment and partly other things, you must be able to allocate the interest expense to each purpose and, if audited, prove your allocation to the satisfaction of the examiner or the Tax Court.
I don't feel qualified to comment further.
