Yeah, I'm pretty sure that incest between a brother and sister is illegal in Japan, though I could be wrong. With that in mind, and the fact that the actor's face is pixelated, I'd say it's reasonable to assume it's fake.
Honestly, it's a good rule of thumb to assume that the more outlandish stuff in JAV is fake if they can fake it. It's just easier that way. Of course, that's not to say that there isn't some really "out there" stuff that's real - scat, for instance. It just means that expedience is usually going to be the #1 concern.
On a related note, there's a movie on Netflix called Lala Pipo that deals with, among other things, AV and Fūzoku. There's an accidental incest scene in it but I won't spoil it by being more specific.
It's kind of low-budget and a little cheesy; but if you like Japanese movies at all and have Netflix, it's probably worth a watch. And for the record, it's basically rated-R, so don't go in expecting soft-core porn or anything.
-Nick