Similarly, the sale ($575K) minus your adjusted basis determines your capital gain.You may qualify for the primary residence exclusion (up to $250K single/$500K married) if you lived there 2 of the last 5 years.

I believe you have 12 months after the declaration to qualify.

Our issue is income on papers too low to qualify for the an FHA or traditional loan.

If you can qualify for an FHA mortgage that amount can be as little as 3.5% of the loan value.  

It is highly specific, my recommendation is to contact the city directly with qualifying questions or have us do it for you :) In general Astoria is also a No-Go with the exception of commercially zoned properties.

@Jade Frank I agree with what @Dominic Mazzarella and others are saying here, but If you find the downside outweighs the gain and you ultimately decide to sell the property, Since the property was held for investment use it would qualify for a 1031 exchange. 

Also find a good lender that is well versed in STR/MTR loans to make sure you qualify for financing (if you need it) and that they can execute the loan smoothly

I’m not a first time home buyer but wife would qualify, I want to put down less than 10%. 

Another possibility is a cash-out refinance on your dad’s house if it qualifies, which would tie the loan directly to that property.

If your brother is looking to invest in real estate largely from a tax reduction standpoint they should pay a qualified real estate tax strategist to review their specific situation and what may or may not work for them.