Yes, enter your property tax and mortgage interest in the Home Office and remove it from the Deductions & Credits section.
TurboTax will then automatically calculate how much of this taxes and interest can be deducted for your home office. It will also add any remaining interest to Schedule A. See and example below.
Let's say you lived in the same home all year, and you used your home office all year. Let's also assume your home is 2,000 square feet and your home office is 200 square feet, so your office is 10% of your home. (See the attached screenshot below. Click to enlarge.)
You have a Form 1098 with $6,000 of mortgage interest in Box 1. Since your home office is 10% of your home, 10% of your interest, or $600, can be deducted on your home office. (See the attached screenshot below. Click to enlarge.)
If the "Yes, include for my home office deduction" box for your lender is checked, we'll assign $600 to your home office and automatically put the remaining $5,400 on your Schedule A as an itemized deduction. (See the attached screenshot below. Click to enlarge.)
You might ask yourself, "Well, I get the total $6,000 as a deduction even if I enter the whole amount as an itemized deduction. Why should I bother doing it here?"
The answer: Taking the part you're entitled to on your home office can help you save even more money on your taxes.
Here's why: Any amount you're allowed to deduct on your business not only reduces your income tax, but also reduces your self-employment tax. That's more money in your pocket!
[edited 3/1/2017 to include screenshots]
