You should also seek an answer to your tax question from a professional.
You are granted a stepped-up basis as of the date of your father's death. In other words, the home may have cost him $50,000 20 years ago and on the date of his death it is worth $200,000. That is its value to you. If you sell soon aftewards, the value will not have changed that much and you will likely owe no tax.
As you probably already know, the profit from selling your primary residence is not taxed if it is under $250,000 (or $500,000 for a married couple). Since this home is not your primary residence, you would have to pay tax on the profit you earn when selling.
If you set up an owner-financed sale, you will be paying taxes on the profit (including the interest). You do need to check with a tax pro or the IRS (anonymously if you wish) to find out the rules for installment sales, which is what you would be involved in.
Depending on your circumstances, you might be better off hanging on to the home and renting it out until the RE market improves. Or sell it outright and pay little or no tax on the transaction. Or get a monthly check. Good luck with your decision!