For starters, what you are doing for dad is commendable. So many of today's younger generation has to issues with kicking mom and dad to the curb. So I'll be damned if I'm going to allow the IRS to soak you or penalize you for being a good son/daughter. (whatever the case may be.)
Here's how things work on the legal front for this. If you show this as a rental property this will NOT help you tax-wise. That's because when renting below FMRV you can only claim your rental expenses up to the amount of the rental income, and you can "NOT" carry over the excess to the next year. You you "lose it" permanently and forever. So at $209 per month you're only collecting 2508 a year in rental income. That doesn't even cover the mortgage interest, and it definitely doesn't cover both the mortgage interest and the property taxes. We won't even talk about the depreciation you're required to take by law on rental property. Therefore you should consider this a 2nd home.
For the $209/mo you're paid by dad, consider it a "gift" from dad. Gifts of less than $15K in a tax year are flat out not required to be reported on "ANY" tax return.
Treat the house has your 2nd home and claim the mortgage interest and property taxes on SCH A in the "your home" section, along with the mortgage interest and property taxes for your primary residence.
