Depreciation recapture is generally all taxable in the year the property is sold and the capital gain is recognized as cash is received (i.e. cash down in year of sale and cash payment over the term of the note). 

Without really knowing your objective(s), such as maximizing ROI, or cash flow, or avoiding a taxable gain, etc., how can you get meaningful feedback?

Your taxes are wrong - this is taxable income and not reporting it is illegal. 

If you rent it out 3 or more years that $100k will become taxable.

This is something your accountant can answer for you given your current 2022 income and your projected rental incomes for 2022 and atleast 2023.If your total income is $60,000 and you are married, you have standard deduction wiping out $25,000 of it only leaving $35,000 taxable which is likely taxed at around 10% - 12%.I might not even waste some deductions to wipe out income taxed at a low tax rate.Best of luck in your decision.

@Elizabeth Shelby I may have totally misunderstood what you said, or maybe you have received some incorrect information from the vacation rental home owners in your area, but you absolutely CAN add additional fees to the rental rate that you advertise on Homeaway/VRBO:Not only can you add whatever fee you wish, but you can also indicate if the fee is taxable or not.

@Ryan Melander, Any cash that comes back to you over or under the table is boot and would be taxable.  

The answer to your general question is yes it is common for a financed cash flowing rental property to show negative taxable income which may offset other income depending on the application of the passive loss rules to your situation.

An LLC is a pass through for tax purposes, meaning that whatever net income comes into the LLC becomes taxable income to the LLC members in proportion to their shares of ownership.

@Randy Walters , your mom should be able to sell the house (primary residence for last 2 years or more) and $250k of gain is non-taxable.