the interest is not deductible until the improvements occur is the way I read it. If you do the cash out refi on Day 1 and don't do the improvments for a year, then for that 1st year, the interest on the cash out is not deductible.
what is confusing in the publication is it talks about (with examples) what happens if you improve the home first and take the mortgage out later,
but your question is what happens if you take out the mortgage first and do the improvements later - that is simple to me
