It doesn't matter what you spend the money on.
The owner of the home pays tax on any capital gains when the home is sold. Depending on how the home was owned before and who inherited it, it probably received at least a partial step-up in basis; and depending on the time between the death of the prior owner and the sale, and how the home was used, there may be little tax actually owed. But you would need to tell us more.
Then, how the money is spent is completely separate and has no effect on the tax owed for the sale. Again, depending on who owned the home and received the proceeds, and whose care is being paid for, there might or might not be a schedule A itemized deduction for medical expenses (but that is true regardless of where the money came from). Again, we would need more details to explain further.
