Because you are renting to family, you do not have to collect Fair market rent. You can discount it because family will take better care of your property. How much less is fuzzy and subjective. I'm of the opinion that if they're covering mortgage + insurance + HOA, you're on solid ground.
Report the income (enter at Rents & Royalties/Income & expenses from Rental Properties); and then deduct the expenses on schedule E. Your net income will usually be less than zero.
What you are NOT allowed to do, because it is really your 2nd home (not rental/investment property) is claim a loss from this activity, to offset other income. Because of the "personal use rule", your deductions are limited to your income. Net effect ZERO. Your expenses are deductible (mortgage interest [not the full mortgage payment], property taxes, insurance, utilities, repairs, and depreciation [if needed}). Your net income will usually be less than zero.
It is possible for you to gain a positive tax effect from this activity; If enough of your schedule A deductions (mortgage interest & property tax) are shifted to Schedule E, and your standard deduction becomes bigger than your itemized deductions, you will have effectively saved on taxes.
TurboTax (TT) does not handle this properly. TT will not limit your deductions to your income. You have to do that manually. TT wants you to enter this as a “not for profit rental”, which does not use Schedule E and puts your expenses on Schedule A (itemized deduction). I'm of the opinion that's not the proper way.
