Sometimes a furnace has been changed over to a high-efficiency unit that is vented independently. The flue gasses are so cool they can be vented out a sidewall through a PVC pipe. By removing your old furnace from the flue that was shared with the water heater, this is effectively “orphaning” the water heater on the flue.
Flues are sized to accommodate the flue gasses of all the appliances they serve. Cold air in a large flue will not warm quickly enough for the water heater to exit through the top of the chimney. In other words, the water heater vents into the house.
Besides CO and other nasty toxins, water heater exhaust has a lot of moisture. That moisture is very caustic. The exhaust condensate can damage the inside of the chimney.
What to do? A new, small liner can be installed in the old one, or the water heater could be replaced with a direct vent one, or an electric water heater.
Ask your HVAC specialist to help you explore your options.
