I had the same issue with turbotax not allowing to deduct a 31K mortgage interest. The work around is rather simple:
1. Go to "Forms" menu - on the top right corner of the screen.
2. Open form named "Tax & Int Wks".
3. In the "Mortgage Interest Limited Smart Worksheet" section check the No box on the line "Does your mortgage interest need to be limited".
Enjoy.
That looks like a software bug for me. Hopefully the Intuit support staff reads these posts and will fix it ASAP.
Cheers,
Andrei
