Yes, the amount of interest you can deduct will forever be limited on this loan and any future refinances by the amount you took out that was not used to buy, build or substantially improve the home that it secures.
So if in 2020, you had a $50,000 cash out and did a refinance for a total of $200k, you would only be able to deduct 75% of the interest on the loan for the life of the loan. If you refinance and never take anything more out, it will always be the same. If you take more cash out to pay off credit card debt or buy a boat, then the amount of interest you can deduct will be diluted further by that percentage. If you take cash out to put a new roof on, then this would increase the percentage of interest you can deduct.
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