Tankless Water Heater Costs at a Glance

• Tankless water heater: $1,200-$5,000
• Compare to a traditional water heater: $1,300-$2,000

It's a ritual most homeowners know far too well: You open the electric bill and discover that it's much higher than you had expected. Where's all that extra energy going? Your water heater may be the culprit. If that’s the case, switching to a tankless water heater may solve your energy problems.

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The good news is that ditching the tank can mean an instant drop in your home's energy costs because tankless water heaters only heat water when you need it, not 24 hours a day. For more information about tankless water heaters — including installation costs — read on.

How Does a Tankless Water Heater Work?

A traditional system drains hot water from its stored reservoir. Water will come out hot for a while, but prolonged use or use of multiple appliances at once will quickly deplete it.

Alternatively, a tankless water heater heats water as it passes through the system. This means that it will never run out of hot water, even if you’re running multiple appliances at once. Because it heats water as you need it, it can save between 27% and 50% on fuel costs over traditional tank-type heaters.

How Much Does a Tankless Water Heater Cost?

If you opt to switch to a tankless system, expect to pay $1,200 to $5,000. In some cases, you may also need to rewire your home to support a tankless system, which could increase the overall price. To make sure your household always has the hot water it needs, a professional installer will make calculations to determine how large your tankless water heater should be. If you have several appliances, such as a washing machine and dishwasher, or multiple bathrooms, you may benefit from a larger unit.

Most homeowners will need to install a new traditional water heater every decade or so. A new tank-type system and professional installation costs between $1,300 and $2,000. While a tankless system costs more, it may also last longer. If properly cared for, you may not need to replace it for 20 years or longer.

When you've got a traditional water heater in place, there are very few things you can do to get it to last longer than its standard life expectancy. Conversely, a tankless model can often be repaired by a qualified plumber. Parts are generally inexpensive.

Can a Tankless Water Heater Increase Home Value?

While there does not seem to be sufficient data to support the claim that installing a tankless water heater will increase your home's value, it may serve as a selling point for interested buyers. The overall efficiency and possible energy savings may encourage buyers to purchase a house with one already installed.

Benefits of a Tankless Water Heater

In addition to virtually unlimited hot water on demand, tankless water heaters offer many benefits:

• Energy efficiency, which may result in savings over time
• A longer lifespan compared to traditional water heaters
• Takes up less space than traditional water heaters

Can a Tankless Water Heater Fill a Tub?

Yes. Because it heats water as it passes through, it may take longer for a tankless system to heat enough water to fill a bathtub when compared a traditional water heater. However, one of the benefits of a tankless water heater is that it provides nearly unlimited hot water.

More Related Articles:

• Here’s How Much It Will Cost to Replace a Water Heater
• Water Heater Installation Costs: Tank vs. Tankless
• Types of Hot Water Heating Systems
• 7 Tell-Tale Signs of a Water Heater Not Working
• How Much Does a Water Softener Cost?

Does Hard Water Affect a Tankless Water Heater?

If you live in an area with hard water, you're going to need to invest in a quality water softener to prevent problems with your tankless system.

The minerals in hard water can cause limescale to build up in your water heater. When limescale starts to interfere with your water heater, it makes it harder for the system to heat your water. It should be noted that traditional tank systems are also susceptible to sediment buildup.

Can I Get a Tax Credit for Buying a Tankless Water Heater?

Tankless water heaters may be eligible for a federal tax credit because of their energy efficiency. This offsets a portion of the total cost and may make a tankless system more affordable.

Since we’re all home now more than ever, being prepared for unexpected home repairs with a plan from HomeServe is important. Having a plan in place gives you the peace of mind knowing that you can simply call our 24/7 repair hotline for covered breakdowns. See what plans are available in your neighborhood.