Another sick house found and in this case the problem could have caused serious health and safety issues, possibly even death.
What was the problem? Improper venting of the water heater caused the flue to rust out. So, in a closet inside the home (where the Furnace and Water Heater are stored) there was a disconnected water heater flue which also could have allowed the water heater & furnace to vent into the home.
The broken connection pictured here is evidence that the water heater is not venting properly, moisture is condensing inside the flue and eventually rusted out the water heater flue. Now there is an open path for combustion gases to move into the home since the closet is not air tight. Not only could this cause combustion gases to flow into the home from the water heater but now there is a hole in the furnace flue and those gases could make it into the home.
The most serious concern is Carbon Monoxide because it is silent, invisible and odorless. But there are other compounds you don’t want to pollute your home such as Nitrogen Oxides, Sulfur Oxides, Methane, VOC’s, Particulate matter and other Green House gasses. http://www.epa.gov/ttnchie1/ap42/ch01/final/c01s04.pdf
This home was about 50 years old and had been purchased about 4 years ago. SO, this home was sold with this condition and it was not identified.
Looking at the water heater flue notice that it has a negative slope. Flues on gas appliances should never slope back towards the ground. They need to carry combustion gases out of the home and most do so by the buoyancy of warmer combustion gases compared to cooler air outside of the flue.
Rust and other evidence of moisture due to mineral deposits on flue. This is an indication that the moisture vapor carried in combustion gases is condensing and you have moisture vapor turning back into moisture and leaking out of the flue.