@Vanessa A wrote:
You do not report it on Schedule E if the average rental days is less than 7 days. It is considered a business activity and reported on Schedule C. The Office of Chief Counsel IRS has issued a memo stating "The average period of customer use of the vacation property is seven days, and therefore the activity is not considered a rental activity for purposes of § 469 pursuant to Treas. Reg. § 1.469-1T(e)(3)(ii)(A)" Memorandum 202151005
The key words are "for purposes of § 469", so unless the owner provides substantial services to the renters or is a real estate dealer, the rental income and expenses are reported on Schedule E, NOT Schedule C.
Even the instructions for Schedule E acknowledge the foregoing:
Generally, rental real estate activity is reported on Schedule E even if it is also a trade or business activity; however, if you provided significant services to the renter, such as maid service, report the rental activity on Schedule C, not on Schedule E. Significant services do not include the furnishing of heat and light, cleaning of public areas, trash collection, or similar services.
Schedule E Instructions
