I would honestly just find someone such as a LFS
to take the damsel off of your hands since most, if not all damsels will outgrow an 8g tank. After that, start with freshly mixed sw
, just keep the sand wet and the live rock in a bucket(s) of the old tank water. Water contains little bacteria, so you wouldn't gain much of anything by saving your old water. Read up on fishless cycling in the articles section.