When you refinance a rental property for more than the previous outstanding balance, the portion of the interest allocable to loan proceeds not related to rental use generally cannot be deducted as a rental expense. Chapter 4 of Pub. 535 explains mortgage interest in detail.

Unless you use the proceeds for improving the rental property, or purchasing another rental property, you may be losing a deduction. 

You are supposed to trace how the funds are used and deduct the interest accordingly.