You don't report the 1099-INT interest on Schedule E. You report it just like you would any other interest income you received,and it will be reported on Schedule B, and your 1040.
If you're expenses are being capped, you may be treating your rental like a vacation rental. If you entered half the number of days in the year as personal use, and half as rental, the program will treat it like a vacation home with personal use and limit your deductions. If the property was a dedicated rental for the second half of the year, don't enter anything for rental days and personal use. You then enter 505 of your property tax, mortgage interest, etc. the expense amounts for the rental. And as mentioned by InHisName if your MAGI is above $150,000 your losses will be suspended and carried forward until you have passive income to offset, or sell the property.
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