The steps to enter your rental income and expenses are shown below. The mortgage payments are not subtracted from the rent. The mortgage interest is deductible as well as property taxes and insurance.
For the cost of the house, you will use the purchase price and purchase expenses, as well as any costs for capital improvements to the property as a depreciable asset. This is the way the actual cost is deducted which is the principal portion of your mortgage payments. Be sure to answer "yes" it was rented all year and at 100% of fair market value (not rented to a relative at less or used for personal purposes after it became available for rent).
- Click the images attached to enlarge and view for assistance.
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