"Some of the repayment is interest which I don't think we can claim."
That's right.
No you do have to recalculate the taxes. If the refund was $1,500 and after recalculating the taxes the refund went to $3.200 you'd know you have a $1,700 tax credit for this year. I don't think there's anything to prevent you from also amending the 2015 income tax return, dropping the itemized deduction and taking the credit.
One of the (several) big advantages of using a desktop version of TurboTax is that your tax file and the program are right at your fingertips, making the "as if" calculation a snap.
