Your welcome , passive activtity rules are different than home mortgage rules.
(h) Disallowance of deduction for personal interest
(1) In general
In the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year.
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https://www.law.cornell.edu/uscode/text/26/163">https://www.law.cornell.edu/uscode/text/26/163</a>
"The easiest way to trace disbursements to specific uses is to keep the proceeds of a particular loan separate from any other funds.
Secured loan. The allocation of loan proceeds and the related interest is not generally affected by the use of property that secures the loan."
Example.
'You secure a loan with property used in your business. You use the loan proceeds to buy an automobile for personal use. You must allocate interest expense on the loan to personal use (purchase of the automobile) even though the loan is secured by business property.'
"Allocation of Interest"
"The rules for deducting interest vary, depending on whether the loan proceeds are used for business, personal, or investment activities. If you use the proceeds of a loan for more than one type of expense, you must allocate the interest based on the use of the loan's proceeds."
"Interest You Can Deduct'
You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Interest"relates to your trade or business" if you use the proceeds of the loan for a trade or business expense.
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https://www.irs.gov/publications/p535/ch04.html">https://www.irs.gov/publications/p535/ch04.html</a>
The Regulations under Internal Revenue Code (“IRC”) Section 1.163-8T define the method for
allocating interest in order to apply the appropriate deduction limitations for passive activity interest,
investment interest and personal interest and are commonly referred to as the “interest tracing rules”
