Tax implications for using your primary residence to fund an investment vs loan?

[David Melvin]

We own our primary residence free and clear (do not have a mortgage on it) therefore we have equity in it and are wondering if we should do a cash out refinance to fund an investment property (versus getting an investment loan with a higher interest rate).

It seems like the logical thing to do to get the lower interest rate, but we are worried we might miss some tax deductions on the investment property by doing so. Does it all equal out in the end because we are getting to write off the mortgage on our primary residence off our ordinary income or does it make sense for us to have a loan on the investment property itself?

thank you for your help!