It is time to have a heat estimate done of the load made by adding an extension. You could add an instantaneous heater to assure hot water and then have to run the hot water down the drain to heat the house sufficiently. A 40,000 btuh hot water heater probably won't heat a larger house and adding an 80,000 btuh heater for the hot water is doing it backwards. It is time to consider a REAL heating system with a boiler and use the water heater for heating domestic water.