Short Term Rentals and avg stays of 7 days or less

I bought a home in 2025 to be used as a rental and I have some questions regarding treating this as active income.

Facts:

In 2025: purchased $800k. Listed for rent in early December. Had 2 bookings . One for 6 nights over Christmas. The other for 6 nights in March. The Christmas guy cancelled just before arrival . So technically avg stay is 0 nights but it was certainly available to rent.

Does it qualify as a shorty term rental with an active loss? I easily meet all the material participation rules (left my job to pursue this business, I do all the work except some light house cleaning, etc)

For 2026 I’m starting to see a problem. Same rules as above except my average rentals keep creeping up. I had two bookings for 28 days which brings my average to above 7 nights a stay. Should I attempt to provide “substantial services” with these long rentals or am I asking for an audit. It further gets complicated because I found another property that I might convert until a traditional rental and then move into this Airbnb I am currently renting. If that’s the case would it be a schedule c rental (if short term) or schedule e (if long term) for just a portion of the year? Would I recapture depreciation once I convert it to a residence or only when I sell?