Can you legally claim this? Sort of, but it's probably a bad idea to try. Here's why:
First, of all there's the child care. If you are paying them $1500/month, then they need to be claiming $1500/month of self-employment income, which will be subject to self-employment tax of around 15% that is only reduced by (legitimate) business deductions.
Next, there is the rental income. You would have to include $1500 of rental income per month in your income. Only then could you potentially claim rental expenses.
Third, claiming rental expenses will depend on whether or not you are renting at a fair rental value. $1500 may well be fair rental value, but you need to compare that amount with other rentals in your area. If you are renting below fair rental value, then your expenses are not deductible.
Fourth, if the rental is occurring in your home, any expenses are going to be prorated and limited to what is used exclusively for the rental portion. Any personal-use expenses are not deductible.
Fifth, and perhaps more important: substantiation. If somehow you follow all of the above four rules and the tax advantage is greater (very unlikely), then the IRS can ask for substantiation to prove you have a legitimate arrangement. This could include items such as a rental agreement and other proofs.
All of these tax hoops do not make a claim like this very advantageous. However, if you are caring for your parents, provide at least 1/2 of the household support, and they have less than $4200 (each) of taxable income in the year, you could claim them as dependents, which would be much simpler, easier to substantiate, and probably a greater overall benefit than what you suggest above. Here is a link that can assist you with this:
And if you claim them as a dependent, it will not be necessary to claim babysitting income paid to them (because they are not receiving money for this), nor rental income to you (because you are caring for them in the home), or any other complicated information.
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