Since you are renting to family at well below FMRV, expenses that exceed the rental income are not deductible and you can not carry them forward. You just "lose" them permanently and forever.
At $350/mo you have $4,200 a year of miscellaneous unearned income. I wouldn't bother converting this to a rental at all. Just report the income for what it is and pay your taxes on it. an extra $4,200 a year isn't going to make that much of a difference in your tax liability anyway, and it's not worth the effort of dealing with this as rental income anyway.
Besides, since rental property has to be depreciated, the depreciation recapture when you sell the property in the future will have a huge negative impact on your tax liability in the year you sell. So it's not worth the effort.
