The furnace and hot water heater need replaced. They are old and rusty. But we have further concerns as Don shares. You see when you up the efficiency of the furnace the less output it has, making it harder to get the exhaust to go up the chimney. So then we get faced with needing to reline the chimney.
But if we go with a super high efficiency furnace we can do away with going into the chimney completely as then we can output the exhaust out the side of the house. So when you are considering a new furnace you may find the extra money spent on the super high efficiency might not be so costly as you don’t then have to spend additional money in a chimney liner. Plus you have a selling feature . . . lower heating bills for the new owner!
And we also need to take a look at the duct work: