Hey Houzzers!

We recently purchased an reno project, a back split home that hasn't been updated since the 70s. We love the unique layout and the vaulted ceilings in the living room. The dining room is fine, not big, but not too small. The kitchen has potential for greatness, just needs some revamping.

The current working plan is to knock out the wall between the kitchen and dining room, but leave the living room wall to create some separation. If possible, we would vault the kitchen ceiling too. The odd part of the house is that the one wall only has 12 inch deep cabinets on both the top and bottom. We don't have any work space or real storage on that side of the kitchen. We thought a peninsula would be best (trying not to move the heat), but not sure how to handle the remaining wall - put cabinets back up? Shelves? The Has anyone worked on a layout similar to this? We don't have the funds to open the whole thing up (likely have to put in a new header if we pulled the living room wall) plus we like having some separation to the living area. Debating refinishing the cabinets slightly darker. All the appliances are new already. Any suggestions are welcome!

Ignore the yellow steps! We found that after we pulled up the carpet - wow!