My medical degree to diagnose my illness being due to mold came from a Cherios box- it was on the back of the box I just cut it out and pinned it to the wall."

While I lived there, I painted all the walls and replaced the water heater.

There is some damage to the home (broken doors, nails and holes in wall, bad odor due to not cleaning (and cats I assume), and destroyed carpets. 

Last year, after a storm, my tenant reported a crack in the wall and floor.

Mold had grown on 3 of the 4 bathroom walls and water was all under the sink cabinet and on the floor.

Oh, do you think you can paint the walls before I move in?

Couldn't pass the inspection until he ripped it all apart, removed 2 new kitchens and 2 new bathrooms, moved walls, etc. and made it a 2-family building.

A C-10 Electrical contractor can explain how to split the units, you may have to sub meter yourself.splitting a single unit in 2 is generally more complicated than building a common wall. 

Quote from @Jaron Walling: @Aline Elad You said "we" so assuming you're married you can exclude up to $500k, or $250k single, in capitals gains if you lived in the property for 2/5 prior years. 

Charge rent based on market rates and allocate based on square footage or amenities.