No, you should not leave mortgage interest at zero on the Schedule E. It is to your advantage to claim the portion attributable to the rental on Schedule E, and the remainder on Schedule A.
You can claim the expenses on your Schedule E regardless of whether or not you itemize your personal deductions.
Your personal share of the property's mortgage interest and property taxes can be deducted on your Schedule A form. However, if you do not itemize your deductions, you will not be able to claim them.
TurboTax will compute the portion attributable to the rental if you follow the screens and indicate that you are renting out a portion of your home.
It is advisable to review a printed copy of your tax return before filing to be sure the allocations are reasonable based on the square footage of the rental area compared to the square footage of the personal area.
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