If you are talking about entering data from your 1098, the line before Outstanding Principle on Line 2 is Mortgage Interest, not property taxes, on Line 1. If you have enough deductions to itemize on schedule A, I guess it's possible that after entering the Mortgage Interest on line 1,Turbo Tax shows the Tax Owed without limitation. Then if you enter an Outstanding Principle above the mortgage limit, Turbo Tax applies the limit and the Tax Owed goes up.
