Budget? Will you need to bring any items up to local building and safety code?

Can you put it in a little cabinet? I think you could get a tankless water heater in that price range.

Pedestal sink + bi-fold screen to hide the hot water tank. The hot water tank can't be enclosed more than it is. You can throw in some drywall over the duct work and paint for that budget.

You might find a free standing bi-fold door (like a standing screen) that will fit around the hot water tank...but using the toilette will be very difficult...depends on the orientation of the toilette (pointing towards the water heater or towards the door).