We have two single family homes that we use exclusively for Airbnb. My big question is what kind of property should we classify them as on Schedule E? Are they Single Family Residence or Vacation Rental? Neither seems to exactly match what we do with them as they are not multi-unit rentals, and we don't use them personally like a vacation home? I'm assuming we would go with Vacation Rental, but are there any benefits/drawbacks, or right/wrong choices here?
You should select "vacation or short-term" for the airbnb rentals. Short-term rentals may be subject to state and/or local occupancy taxes. For more information, please see 10 Tax Tips for Airbnb, HomeAway & VRBO Vacation Rentals.
Choosing "single family home" would be appropriate if you were renting the property long-term to tenants who treated it as their home.