Would that lower our tax liability from other income we receive or no because this is purely RE and not an operating business?

It is tax free in the sense that you will not owe taxes today on the cash-out.

No taxes, she got to keep the house and no stress about income.

Everything I'm finding says 27.5 years due to it being rental income but others say 5 years because it's an RV.

So if I’m understanding correctly, if you sell your home within 2yr of purchase, you don’t have to pay capital gains taxes? 

Here’s how using a Self-Directed IRA (SDIRA) to invest in real estate enhances these benefits, especially for those looking to diversify their retirement portfolio: Tax-Advantaged Growth: Real estate investments inside a self-directed account grow tax-deferred (traditional SDIRA) or tax-free (Roth SDIRA), meaning rental income, appreciation, and even gains from selling the property stay shielded from taxes until withdrawal—or forever in the case of a Roth!

REPS does not relate to STR's.For short-term rentals (STRs) with an average rental period of seven days or less, you don’t need REP status to offset losses against other income.

Is $107k your true net, or do you have any other expenses (mortgage, taxes, lodging taxes and fees, insurance, utilities, landscaping, WiFi, etc.)?

Traditional IRA withdrawals are taxed as ordinary income, with a 10% penalty if under 59½, potentially pushing you into a higher tax bracket.

I'd be heavily focused on mitigating that future tax liabilty rather than directly supplementing that income.