I just finished perusing Pub 936. It's a bit more detailed than one might realize.
First, the home used to secure the refi or HELOC must be a qualified home. A qualified home is defined as:
includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleep-ing, cooking, and toilet facilities.
The two types of qualified homes are broken down as:
Main home.You can have only one main home at any one time. This is the home where you ordinarily live most of the time.
Second home.A second home is a home that you choose to treat as your second home.
Then a second home is further broken down and defined as:
Second home not rented out.If you have a second home that you don’t hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You don't have to use the home during the year.
Second home rented out.If you have a second home and rent it out part of the year, you must also use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you don't use the home long enough, it is considered rental property and not a second home.
So from what I see, if you refinanced your primary residence and used the cash out on a rental, if you did not actually use that rental as a home for 14 days or 10% of the time it was classified as a rental, (whichever is greater) then monies not used from the refi or HELOC taken out on the main home, to improve that main home do not qualify for an interest deduction anywhere on the tax return.
