The Tank › Hot Water Tank puts off a lot of heat – is this normal? › Reply To: Hot Water Tank puts off a lot of heat – is this normal?
Gas water heaters DO generate heat, and water heater closet can be a pretty warm place. Putting it in a smaller closet could constrict oxygen supply and cause it to soot up, which can be a hazardous condition. You’d want to make sure there were air vents top and bottom in the door or wall or whatever.
Moving it means not only replumbing and rerunning gas lines, but also punching another hole in the roof somewhere and patching the old hole. Code might require building a pedestal for it.