Cash out refinance on rental: is the interest deduction reduced?

[Jack B.]

Let's say I have a rental property. I do a cash out refinance and don't reinvest the money I pulled out. Does that mean that I can no longer deduct the full interest on the rental property mortgage? I know the dollar value of the interest and principal payments would change, what I'm asking is will I still be able to deduct 100% of the interest after the cash out refinance or would it be prorated?

What about if I DO reinvest the proceeds in more rentals? 

[Michael Plaks]

@Jack B.

Nobody really pays attention to these rules, so thumbs up for asking.

@Lionel Li is mistaken, it does matter. If the old loan was $100k, and you refinanced into a $150k, only 2/3 of the new loan's interest is deductible against this rental. 

If you use the $50k to buy another property, then the interest on $50k would be deductible against that other property.