Have you talked to a structural engineer? Do you really need that whole wall on the right side of the island or do you just need a column to tie into a ceiling beam?

That diagnoal wall is driving me nuts. Even though your fireplace is on a diagonal, I don't think you need to orient your kitchen and new island on a diagonal.

Houses aren't built to need diagonal structural walls in most cases. You need pro help to determine what structural support, like a beam, in necessary to remove the diagonal walls if they are structural. For now, use graph paper to draw a floorplan of the entire level in scale. Include windows, doors and measurements for everything. And post it.

Many homes appear the kitchen was placed first this one seems to have forgotten until too late and stuck a kitchen in empty space in the walls. What doesn't work for you? Is this your only living space? Perhaps you need to enlarge your kitchen and include a small seating area around the fireplace.

living room needs updated lighting. What about the kitchen needs redoing ? I see some interior design improvments for the living room with space utilization and furniture placement. Traditional space ....coziness could be enhanced....

bring loveseats out from the fireplace..facing each other .....and maybe some other adjustments on the far ends of the living room ....Interior design individual might help the most at least initially.... before or as you think about a kitchen renovation. changing the couch alignment will make the diagonal island w the cut out and counter/ bar a feature.....some things can be done w aesthetics....

re-align furniture at fireplace...... also clears the walkway across the counter ....design adjustments could be executed.

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The layout can be changed into almost any configuration depending on how much money you are willing to spend. The current wall could probably be replaced with a column with beams above but that really depends on what a structural engineer might think about it.

I like the space - lots of nice trim , and it seems open and cozy at the same time. If it were me, I’d remove the bulky doors on the opening between the kitchen and family room, and update the wallpaper

Unless you need/want new cabinets and appliances, I think the kitchen can be lightened up and updated with new lighter colored counters and backsplash.

Get rid of the stripes.

Then update the furnishings and decor in the rest of the space.