Renovating Empty Home of Elderly Relative in Residential Care

Hi my mother-in-law moved in to a residential care home over the summer. Her former home is not in a great state of repair. We are in the process of setting up a Deferred Payment Arrangement with the local authority to fund her on-going care. My in-laws owned the property as tenants in common, with equal shares. My father-in-law is no longer with us and his 50% passed to a trust with my mother-in-law and his daughter (my wife) as the trustees. We have LPA and believe that it would be in our mother-in-law's best interests to renovate the property for rental. This would provide additional income for her and would reduce the debt under the DPA. Just getting started with all of this and wondered if anyone had any comments on the following.
1 - Is this broadly sensible?
2 - What implications would it have for income tax for my mother-in-law and eventually Capital Gains Tax and Inheritance Tax?
3 - What would be the best way of financing this renovation? I am assuming that it's unlikely that my mother-in-law could raise the financing. We possibly could but I am concerned as to how we would protect our investment.
Any advice appreciated.
Mike.