Yes. In fact, the IRS updated Pub 936 for handling balances incurred between 1987 and 2017. The software should have updated that for you.
There are different ways to calculate the balance. If you calculate a more favorable deduction using an approved method, you can:
- enter the correct mortgage interest amount allowed
- select the balance was below $750k so the program won't try to figure it again.
- Sch A only shows the allowed amount when sent to the IRS- none of the program questions and answers.
- The IRS knows your balance was over $750k and will see your mortgage interest claimed is less.
Reference: About Publication 936, Home Mortgage Interest Deduction
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