The IRS link below states that you can deduct not-for-profit rental expenses up to the amount of rental income. You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. And yes, the expenses are deducted as a miscellaneous expense subject to the 2% rule.
The publication doesn't go in to any details regarding what kind of expenses you can deduct. These would be any expenses that your incurred in order to collect the income. Deduct mortgage interest and property taxes in the Your Home section. They won't be subject to the 2% rule.
The expenses would be similar to the expenses that are deducted on for-profit rental. Some example of expense categories would be:
- Advertising
- Cleaning/Maintenance
- Insurance (a proportionate share)
- Repairs
- Supplies
- Utilities
https://www.irs.gov/publications/p527/ch04.html#en_US_2016_publink1000219164
https://www.irs.gov/pub/irs-pdf/p527.pdf
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