I agree with Palimpsest's suggestion of making it a 3/4 bath (i.e. a full bath with a shower instead of a tub). That would let you shrink it so it doesn't eat into the LR, and create more separation, but it will still list as a 2BR/2ba on any real estate listing. (I've never seen "1.75 bath" in a listing--a full bath is a place where you can wash yourself, and whether that's a shower or a tub it's still a full bath; AFAIK people just call it a 3/4 bath to be more precise, but a realtor's still going to call it 2 bath). I think the 3/4 bath idea will accomplish both of the things you want to accomplish here. It will let you shrink the space and give it more separation and privacy, but it will still keep your house technically as a 2BR/2ba, so when you're trying to sell it, potential buyers won't automatically cross you off the list as soon as they read "1.5 bath" in your listing. Also, maybe this is a stupid question, but not seeing your layout I can't be sure. So here goes: Is there any way things can be reoriented in that bathroom so that it doesn't open directly into the living room? What are the other walls adjacent to, and what's nearby, and where is it at least theoretically possible to move the door to? Could it possibly open into a hallway?

The fixtures are Moen Kingsley, chrome finish. (purchased by plumber ) The shower in master is one of their complete 3/4" spa sets, + we bought a separate Moen showerhead...the one that you can switch from rain back to normal....highly recommend this option. Chrome is a rare phenomenon....my wife and I both love it, and it's the least expensive finish option! The kid's vanity is 28", and ours is 42 or 44"...both ordered from Home Decorators, complete w/ granite tops/sinks. ...The vanities is where we saved a bit. We're very happy w/ both vanities. One caveat, the drawers are pretty much wood boxes that sit inside cubby holes..no slides/dovetails/etc....We don't expect them to last a lifetime, but again, I'm happy with what we got vs. what we paid, and the wood finish looks great on both. . ONe caution...plumber hated hooking up the waste to the 28"...that is a very narrow cabinet! flying diver, thanks on the floor comment...it's carrara, so expensive per sqft, but not too much in our small bath! We both love the feel and look of it

Do you have a separate Dining Room (this is where it would help if we saw the layout of the entire floor - both here and on Kitchens - not just the addition, the entire floor). I'm asking b/c if you do, you might consider making the table space a banquette and taking more space for the Powder Room. (Bench along the Powder Room and, possibly, "top" walls) Regarding the laundry - I'll be honest, I would not want my laundry anywhere where guests could see it - and putting it in the Powder Room means guests will definitely see it! It might help to build an enclosure around it - it would at least hide the washer & dryer, but it wouldn't help with any laundry sitting in the room - clean or dirty. Note that expanding the Powder Room may mean going with the narrower window (8'+ vs 10').

By IRC, the ceiling height may be reduced to 60" "where people cannot walk" which means the back of the sink or the back of the toilet, or a shower area taken up by a bench (as long as the 30" hoop/80"is met in the shower) , so right now it appears that the toilet is in a spot that would no longer be permitted. You definitely have the room to get a legal powder room in this space (by international code/your local codes my be more stringent), ceiling height and all. Maybe just not with this toilet location or position. If you could move the toilet it may help, but moving a toilet is not cheap. The other thing is since you have a hole in the roof already, you may be able to enlarge it and pop up a dormer. Again, not so cheap. In my location, if the toilet was not relocated and was 12" on center instead of 15" (the old requirement), it would be grandfathered. Actually, that would be allowable in some circumstances now even if the bathroom were completely reconfigured (such as it being the sole bathroom in the house and only having limited room). A toilet in that position may have met a local code at the time it was permitted, or at least passed in your jurisdiction at one time, but currently it could really only be in this general position if it were turned 90 degrees and the Tank was against the knee wall. Could you draw this in a plan and indicate the various ceiling heights throughout?