Less Rental Write-Off
The IRS says that if you rent to family or friends for "substantially less" than fair market value, that counts as personal use of the property. Expenses from personal use aren't deductible. For example, suppose you rent a property to a regular tenant at the full market rental rate for six months, and then you rent it to your daughter for next to nothing the other six months. You can only deduct half the year's expenses and depreciation. You still report all the rental income, however. If you had charged your daughter the fair market price, you could have taken the full deductions.
Fair Market Value
The IRS says fair market value is a price within the range of what other landlords charge for comparable rentals. If you want to survey the market, comparable rentals are units in a similar location, of a similar size, with similar furnishings. Unfortunately, the IRS doesn't define how low you have to go to be "substantially less" than market rates.
The Effect of Time
IRS Publication 527 lists some special cases with different tax consequences. For example, if the rental has more than two weeks of personal use a year and you rent it out less than 15 days, the IRS classifies the rental as a personal home. You don't report any of your rental income. You may be able to write off some of your expenses, such as mortgage interest, as itemized deductions on Schedule A, but you can't deduct repairs or depreciation.