You can't deduct the interest as an expense of the rental property unless you use the proceeds for improvements to that specific property. If you use the proceeds for other investments, you may be able to deduct the interest as an investment expense specific to those investments, but you have to be able to trace the money. You must be able to prove that specific loan proceeds were used to buy specific investments, and that specific interest charges can be accurately allocated to specific investments. The more complicated your arrangements, the harder it will be to trace and properly allocate those expenses.
There are other rules for deducting interest on money used to purchase investments. First, this is a schedule A itemized deduction, so you will only benefit if the total of all your itemized deductions is larger than your standard deduction. And second, you can only deduct interest up to current year taxable income that you report. For example, suppose you borrow $10,000 to buy stock in company A. You pay $500 in interest. The stock appreciates in value, but you don't sell it, and it pays a $100 dividend. Since your only taxable investment income is $100, that's the limit of your deductible interest. The remaining disallowed interest deduction is carried forward and can be claimed against investment income in the future (such as when you sell the stock and have a taxable capital gain.). The interest is reported on form 4952. https://www.irs.gov/forms-pubs/about-form-4952
The ability to deduct interest on investments is the only investment expense deduction that survived the TCJA of 2018. All other investment expenses (for advice, recordkeeping, account maintenance fees, etc.) which used to be 2% itemized deductions are disallowed for tax years 2018-2025.
