When you calculate the square feet of the room your niece is renting, and if that is the only area of the home that she is allowed to use, then you would also use that square feet and divide it by the total square feet of the home (including her room) to calculate the percentage of rental use.
Once you arrive at the percentage, this will apply to all expenses that are for the entire house for the rental portion (real estate taxes, mortgage interest, utilities, home owners insurance, as examples).
You will also use this to tell TurboTax what percentage of the home is for the rental unit. Keep in mind our awesome tax expert @Mike9241 explained that the rent must be at fair rental value (FRV). This means exactly what you would charge a stranger if you were renting the room to anyone. If this is the case then say 'Yes' it was always rented at FRV.
It may work best if you calculate the expenses and depreciable cost basis (total cost of home including capital improvements OR fair market value (FMV) on the date you began renting it whichever is LESS) yourself. Sometimes this gets complicated for the software.
The land should be separated out from the building itself because land is never a depreciable but rather an appreciable asset. The tax assessment usually shows an amount for the building and land separately. You could use this by taking the land and dividing it by the combined total to arrive at the land value of the cost basis (FMV or actual cost). Enter the correct amount of any prior depreciation you did use on past returns.
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