As I discussed yesterday, I have a 65 gallon natural gas heater with a recirculating pump system that may have a leak. I'm considering a couple of replacement options, one of which is another tank.

I'm also considering a tankless. There is a significant tax credit and rebate from the gas company for doing that.

Aside from the general pros and cons of tankless, what do you do with the existing recirculating pump/system with a tankless? I suppose one option is to disconnect it.

If I wanted to keep it, how would you design such a system? Would you have the tankless system on the line ahead of maybe a 5 gallon heater that would utilize the existing recirculating system?

Would such a system work and provide the best of both worlds? Or maybe it would cost so much interms of installation and energy use so as to defeat the purpose of saving money with tankless? Also, perhaps such a setup would void any tax credits or rebates associated with a tankless.