A report from E&Y isn't an authoritative source, the tax law is. And §168(e)(2)(A) defines "residential rental property", and it excludes "a unit in a hotel, motel, or other establishment more than one-half of the units in which are used on a transient basis".
Section 168 does not clearly define transient basis, the tax courts have upheld that the tax code generally defines transient basis as an average stay of 30 days or less in other sections of the tax code, including section 1.48-1(h)(2)(ii), and also backed up by PLR-139827-07. § 168 pre-dates Airbnb and wasn't written with modern STRs in mind, but it does apply to any type of "transient" (short-term) rentals, and there isn't an exception if the property is a house vs. some other type of building.
Someone renting their home on Airbnb with an average stay of less than 30 days has to depreciate it over 39 years, not 27.5.
Yes, this is unrelated to whether it goes on Schedule C or E, but I just wanted to correct that part of your original comment to point out that even with an average stay under 7 days, it still doesn't go on Schedule C. Short-term rentals still go on E, with the only exception being substantial services, which is very rare and not typical of an Airbnb.
A side note about that E&Y tax guide, it's very unfortunate that they not only didn't give correct advice on depreciation, they also didn't mention the STR loophole/strategy at all, which is probably the most relevant tax advice someone with an STR should be made aware of. At least their Schedule C vs. E information was correct.
