The vacation home rules apply only if you use the "vacation home" for at least 15 days each year for personal purposes. A timeshare can qualify as a vacation home. However, unless you own at least four weeks at a single resort, using at least three of the weeks for personal purposes, you can't take the benefit of excluding the income from renting the fourth week, because there is no practical way that you could use your timeshare for at least 15 days and rent it out to others.
Thus, in almost every situation, you must report the rental income and expenses on Schedule E.
Here's more guidance on Timeshare Rentals.
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