You should use new sand. I would use natural color sand rather than any exotic color sand. Better for the fish. Ditch the old sand other an seed sand. You can soak new sand in a bucket using old aquarium water for several days to weeks. This will put your sand bed light year ahead with setting a new sand. 40 gal is so easy to set up. You can set it up using a new sand bed and old rock and put the fish right in, no cycle needed. Just keep the rock suberged in water all the time so it wonk die out. I would get a 30 gal plastic tubmove everything in it. Take the old tank out once it is empty. Put the new tank up, set up the pre soaked sand. Add water, then bring the rock, corals, fish over and you are done.Mixed water ahead of time, warm it up with heater so you don't temperature shock the animals.