For most instances, there are local codes in your area that will state the minimum clearance for walls that surround a furnace. According to the residential international code from 2006, there should be 3 inch clearances from the sides and the rear at all times. If enclosed, the space must be dimensioned at least 12 inches wider than the furnace. If a door is in front, there needs to be 6 inches of clearance. If a wall is in front, there needs to be 30 inches of clearance. On the installation instructions or on the furnace itself, one can also find what is recommended for that particular model.

On the Other: General Rule of Thumb

A furnace needs to allow enough room for maintenance. A general rule for enclosing a furnace in walls is to have the front wall be a distance equal to the depth of the unit. Around the sides it should equal to half the width of the depth.

Bottom Line

Do not squeeze a furnace into a space. The furnace will need adequate space to access it if any problems arise, and should have enough room for a person to move next to it. Make sure to also check with local codes so that you comply with them when you build walls around your furnace.

Source:

International Residential Code

HGTV Pro

Resource:

Furnace Installation Guide