Buying my parents home and renting to them, need tax advice :)

[Joe Wentworth]

I'll keep it simple, their credit is not good, mine is great, I have my own home and have amazing credit, they have first and second mortgage on theirs at high rates and cannot refinance due to lack of income (one stopped working). I would like to buy their home at current market value + 20k or so to pay off their other debts (so no bank thinks it's something shady, home appraisal would confirm this value) and then rent it to them at basically what the new mortgage at low % is.

I have no idea who to speak to about paying taxes on income or where to begin, Their home needs some renovations so I would also like to write those off as I do them.

Are income taxes paid on rental income when I'm renting at a loss? lets say I rent for $1000 and the mortgage is actually $1200?

What should I do to pay as little as possible to the gov? :) (LEGALLY) and still end up saving my parents a bundle, just running basic numbers I'm looking at $1200/mo savings between their first+second mortage vs. what new one at 4% would be!

Thank you in advance for any generic help you can give me, just please point me in the right direction.