You really need to seek professional help on this, instead of trying to fix this through us "armchair lawyers" in this public user-to-user forum. While the information provided by @Anonymous_ is correct, there could be local laws or ordinances that have the potential to change things a bit. What sticks out to me is that you say you lease it out through AirB&B. So while it's perfectly possible this could be a SCH C business, it most definitely is not "foreign earned" income any way you look at it. With the rental property in the U.S., where you may live on the planet is irrelevant.
For the SCH E or SCH C question, I'll use my own location as an example. In my county, if in the city limits and you rent out a residential property for less than 30 days for any one period during the calendar year, then the property is considered a short term rental for the entire year. That's because short term rentals in the city limits have a $3 per night bed tax imposed by the city for each night the property is rented. (Thankfully, none of my properties are inside the city limits)
Then, as specified by tagteam, if you provide recurring services such as maid service, that does make it a SCH C business. That would mean the assets (such as the structure itself) is depreciated over 30 years (40 years if the business started before 2018). Whereas if you don't provide recurring services it's a SCH E business and the assets are depreciated over 27.5 years.
This can get complicated because you have a SCH C business on the ground floor that I'm guessing was established prior to 2018 and that part of the building is depreciated over 40 years. But the flat above if a SCH E business is depreciated over 27.5 years. But could be 30/40 years depending on the "in service" date for the upstairs. It also depends on what entity is renting out the property too. You? Or the business? If done right that can make a really big difference on the tax front. But what's "right" for your specific and explicit situation depends on way to many factors to cover here.
Now to add more muck to the mix, if your state taxes personal income that makes things even more complicated and more prone to user error in tax reporting.
In a nutshell, you can ask your questions to 5 different people and get 6 different answers.... and none of those answers would necessarily be wrong either. So seek professional help on this. As you can already see, doing things wrong can (and will!) be costly in the long run.
