When it comes to deductible interest expenses, the CRA cares what the money is for rather than where the money comes from. If you borrow against your personal residence for investment purposes, the interest is deductible because it is for an investment. Therefore, it would be deductible against the income of the investment.
Likewise, if money is borrowed from rental A's equity to buy rental B, the interest should be deductible against rental B's income.