Question: Our electric water heater is located in the basement (on concrete floor) under the basement steps (wood). How much clearance is needed above and on sides of the tank in the event we put in a gas water heater? There is a wall of just 2 x 4's on one side and a wall constructed of 2 x 4's and wallboard on the other side with a wooden door in front of of the tank. We just recently put in a gas furnace and a gas clothes dryer. Answer: You'll have to check the clearances on the particular brand that you purchase. Usually, you can get quite close (a few inches) to the sides. You may need a little clearance on the area where you would light or service the burner. It also may need some clearance above the outlet/draft hood. These should be noted in the owners manual or on a tag attached to the unit.