The answer to your question depends on how long you occupy the property for as your main residence.
The period when it is your main residence is exempt (including the last 18 months of ownership). If you've let it out in the meantime you will also get lettings relief, which exempts up to £40,000.
In respect of option 2, the better option (unless your sibling is living there) is probably to simply gift a further £100,000 as selling their share for £300,000 will just increase their CGT liability. Assuming you survive 7 years there is no tax implications on a cash gift.
In respect of your position, it's quite complex. Your CGT base cost is currently 1/3 x £232,000, plus 1/6 x value at 2007 (value you inherited from your father). Lets say 2007 value was £250,000. This means your current base cost for your 50% share is aprox £120,000. If you acquire the other 50% from your sibling for £200,000 then you have an overall base cost of £320,000. If you then spend £50,000 on it this will increase your base cost to £370,000 (excluding legals/SDLT/etc). As a result there is an exposure to CGT if you sell it for more than this value.
You would then need to calculate (on a sale) the amount of main residence relief you are entitled to plus any lettings relief if it has ever been let out, deduct your annual exemption and any gain thereafter will be subject to CGT at 28%.
If you are married, you could also consider gifting a share to your spouse to double the available annual exemption.