Thank you both @JillS56 and @Opus 17 . I really appreciate the help.
@Opus 17 : You are correct, the money was pulled out from the refi in order to purchase a second rental property (Property B), but the deal fell through and the money has since been sitting in the bank as we look for a new property to invest in.
In the scenario where we do purchase a Property C, D, or E, I understand that the mortgage interest incurred for that portion of the debt would be deductible as long as I calculate the correct percentage (substituting the cash value that was actually used in the equation I provided in the other thread) and include them in the correct rental property columns in Schedule E Form 1040, correct?
