Can I allocate mortgage int. from primary residence to a separate rental unit? I can't deduct against primary residence since refi was to purchase the investment property

[JulieH1]

No.

Mortgage interest has to be secured by the property that you are deducting in order to be deductible.  If the investment property is not security for the loan, you cannot deduct the interest.

I found this example in the IRS tax court cases that is pretty similar to your situation.  Read the last sentence.  If you can do that on your investment unit, then you could deduct it.

"What if you refinance your home for $500,000, paid off the $300,000 mortgage balance from when you bought the home, and used $200,000 to buy a second residence? Since the $200,000 loan isn’t secured by the second residence, the interest paid would not be residential housing interest. If you later refinanced the second residence and used the proceeds to pay off $200,000 of the mortgage on the principal residence, interest on the new mortgage would be tax deductible as residential housing interest because it would be funds used to purchase the residence and secured by that residence."