My 1st reaction is the quoted costs to replace the boiler and the costs to convert to forced air seems high.

Thanks for your response, that was my initial reaction and I appreciate your confirmation.

Rental rates- You have a realtor w/ access to data & h/she should be able to tell you what the market will stand w/ respect to rents.Are you in over your head- My 1st reaction to this was yes.  

@Tim VecchioniMy initial reaction would be to sell (tax-deferred if possible).  

I know a lot of people don't like investing in condos, but I would think this is an over reaction to a terrible pandemic. 

My first reaction was about the comment that this person is insistent on renting the house.

When a seller sees that, there may be a little panic going through their mind so the knee jerk reaction is to drop the price +/- $25k.

If they don't, you could still pursue the split through a variance but you'll want some informed opinions on the probability for success from the town and from local attorneys that have presented zoning variances before the town's board of appeals.After you do this initial research, I would call the town and speak with the zoning board or planning board and run through what you want to do, what your take is on how it applies to the zoning requirements and get their initial reaction on how achievable it is and any considerations you might not have taken into account. 

If you're not getting the same rent, the renter in the nicer half is likely going to be resentful that their rent is higher (they know their place is nicer, but that doesn't mitigate the "I'm getting screwed on price" visceral reaction. 

@Aariff Kadar Personally, my initial reaction is the Never Sell Strategy hence my advice would be a HYBRID of #4 and #5 option.The house in Corona might still appreciate in value over the years and you get some cash for your DP for the Irvine house.It's a WIN-WIN situation.