This is a real mix of things. I like to take them one at a time.

Okay, let's drop any reference to the mother-in-law, because an S Corp cannot be married. An empty residential structure was changed into a commercial use? This assumes they meet all local codes and requirements for this to have been done. Or, did you want the S Corp to rent storage space from the owner? And that means the owner did all that work, and there needs to be settlement between the owner and the corporation, since the corporation fronted the funds.

You should separate Office and Storage. The S Corp needs to be leasing or renting the property from the owner for office. They have to determine how the lease should be phrased, since it isn't clear if they need to show that the tenant shall pay for all improvements, but the owner needs to possess/own anything not removable. Example: The new structure.

A lot of times, people have the corporation pay directly, thinking that magically turns this into a business expense. But, it's not.

Question 3 is written rather oddly. You don't get reimbursed for depreciation. The depreciation expense will be taken based on the tax provisions for the entity/person that is entitled to incur the depreciation on the asset. For instance, the property owner really should own the structure, and the corporation would be able to have assets as furniture and fixtures, such as shelving that is removable.

It isn't clear if someone is trying to get "home office" benefit. You can't get both. You cannot turn in to the corporation your home office expenses for reimbursement, and also expect the corporation to have paid directly.

The specifics should be examined, specifically in light of the property type, the work done, the applicable Home Office rules for this employee and their employer vs being the landlord (and now there is taxable reportable rent income), etc. It's a lot to list out and work through.

Good luck.