The biggest issue is that the condensate is very acidic and will corrode the masonry of a chimney.
Venting tankless water heater through wall.
It really is not a good idea.
Tankless water heaters use fans to blow exhaust from the unit horizontally allowing vents to terminate on the side of a house.
Traditional gas tank water heater require venting through the roof.
Power vent and direct vent.
If the unit is installed on a basement wall the vent pipe can be run up just a few feet and then vented out the side with the use of a 90 degree elbow.
Tankless water heaters allow for either horizontal venting out a side wall or up through the roof.
A blower or power vent draws combustion air in to the heater and a power vent pushes exhaust gases out through a separate or dedicated exhaust flue.
By contrast tankless water heaters vents can terminate on a side wall because their combustion fan blows exhaust from the units horizontally.
All water heater venting systems use a vent duct or pipe also called a chimney or flue to bring exhaust gases from the water heater to the outdoors.
This vent also allows for off gasses to be unleashed outside too.
The direct vent water boiler is another type of water heater venting that you should know about.
The duct may be metal or plastic depending on the type of vent system.
Installing your tankless water heater for easier venting to make venting easiest install your tankless water heater on an outside wall.
Technically you can vent your tankless heater through the chimney but only in certain circumstances.
The only other option is an electric water heater which requires no vent.
All solid liquid or gas fueled water heater whether they are tank type or tankless must vent through the roof unless they are direct vent.
Tankless water heaters are ventilated in two ways.
The heating appliance vents directly out through a building side wall powered by natural draft provided by the heating equipment typically using a single wall metal flue or chimney or a b vent.
Tankless water heaters can vent through the roof or a side wall creating more flexibility and options for placement.