Are you talking about the soffit with the down lights in them? Or are you talking about the arched window? I'd probably do both.

Sorry I just fixed the post, the soffit and the window above it

Is there no option to remove the soffit and keep the window?

Also, what is seen out the transom window above the doors when the shade isn't down?

While the soffit and sliver of window are odd looking, I think that large expanse of wall would look odd with the soffit removed and only two small windows in it. Is this the living room or the master bedroom?

it's the only architectural feature you have, work with it.

Remove the carpet.

I'd have chosen "remove the soffit and replace the window with a new window (more appropriately sized/shaped) if that was an option.

this is the master bedroom and outside is the neighbors side yard

I would to place another window in place od that circular one, but that is not an option for us.

This is how my old master bedroom looked in my old house, I didn't have to remove anything, I liked that wall because I could put pictures or decor above the bed, I don't want to replicate it, but would like to be able to have some wall space

I wouldn't be able to sleep well in a room with light coming in at dawn so I'd be more concerned to cover up the arched window than remove the soffit. The downlights look useful if that is where the bed will be but not if they can't be turned on and off independent of each other.

I'd keep them both, and replace the carpeting.

I thought this might be the same house as the bathroom post. IMO those soffitts were installed to add pot lights where they actully gave lighting in a vaiulted ceiling as in the bathroom they look out of place so remove that and as for the window I think if it bugs you with morning light remove it but then what happens outside ? I agree the carpet has to go

Keep the soffit and replace the window with the same size just in a rectangle, more modern shape and replace the carpet with vinyl flooring. I would do a gray.

Thank you for the helpful ideas, I hired an engineer to double check and it was not structural, so I decided to remove the soffit and keep the window above for now, I might remove it in the future. Looks great without the soffit! I love it!

Looks much better!