H & W clients own a property that they rent through VRBO. They are not real estate professionals and they say they don't stay at the property for vacations.

So that total losses can be deducted on Sch E, do I check box G "Other passive exceptions" on the Sch E worksheet? Or is there another box that should be checked?

If, in a future year, they do use the property more than 14 days, or more than 10% of the days rented, then I would think the rental changes from non-passive to passive. Therefore, the reporting can change from non-passive to passive each year based on if the property is subject to the vacation home rules. Is this correct?

Thank you.