The cost to replace a heating system in that size house would usually be about $5,000.00. If you want to separate the hot water, that would cost you an additional $1,500.00. This is also assuming you would use the existing pipes and heat delivery (hot water/steam). You may be able to convert the existing system to gas which would save you money.
You should contact National Grid and see what types of special incentives they are offering to people who switch from oil to gas and then have 2 or 3 licensed plumbers give you estimates for the conversion. If I can be of further assistance, please let me know. Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783