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It's showing as a vacation home because Schedule E is the vacation home form.  I have two homes, a main one in Ann Arbor and a cottage in Northern Michigan.  If I rented the cottage out full time like a rental home, it would be a business and I would use a Schedule C.  However, I stay there sometimes and rent it sometimes. so it is a vacation home.  I have a personal home mortgage on it.  If it were a Schedule C I would need a commercial mortgage and commercial insurance at a higher cost. (We are allowed no more that two personal homes.)  Since your room in in your home, the room is treated as a vacation home, as though it was a little cabin inside your home. And you get the benefits of it being a home rather than a business.