We had something similar, although it was red brick. We installed cementboard over it, and tiled a modern pattern in glass tile. Probably cost a few hundred bucks. We have a direct vent gas insert so there are no open flames. You can certainly do this for well under your budget.

Hi thisisnotadrill, this is very helpful! I am considering a electrical fireplace because I want to get rid of the floor-flush hearth and have the wood floor reach the bottom of the FP.

That hole looks like where the damper mechanism was located.

I am toying between two ideas. One is use brick/stone and run it to the ceiling. the other one is tile over existing brick, but not sure if tiling will be successful as bricks were painted.

The house had a wood burning insert, damper, chimney. Damper key (where the hole is) can’t operate the damper.

We are going with electric FP because I want to remove the hearth. Living room/dining room is a combo. we will have more spaces for dining.

Can you remove the hearth with a gas insert? I would fill the hole and paint it white to match the mantle.

I think with gas inserts, you need the hearth for code compliance

We tiled over brick but we screwed cement board backer onto the brick first. Im sure it would be bear impossible to get a smooth flat tile surface on top.of brick but what do I know...

Get a qualified contractor in there (onsite) please. Multiple variables and not for a few hundred dollars.

Our tile installed had no problem installing tile over brick. First he applied a coat of mortar over the brick to make a flat surface. Then he applied the tile. When the tile was set, he applied the grout.

@Jacqui Naud beautiful! I learn something new every day.

Hi Dragonfly, I talked with a masonry and stone contractor today and he said that we could build a fireplace wall to the ceiling with stone or brick. What are the pro and con of each material?

We could also adjust the size of the opening of the insert to accommodate a more contemporary fireplace. Waiting for the estimate, so hopefully it's within the budget.

Another question: If I demo everything, reconstruct a red brick fireplace from floor to ceiling, should I cover the entire wall (left window trim to door trim on the right)?

When looking at homes saw a brick fireplace that had been painted black. Looked amazingly great, very modern. Wish I took a photo. Following from G images.

@A Green, how big is the room where your fireplace is located? Our original red brick fireplace went up to the ceiling. We had it knocked down a few years ago because the family room isn’t very big and the fireplace wall of brick overwhelmed the room. Also it freed up wall space to hang a mirror.

Jacqui, you brought good point. FP is 6’ W, ceiling is 8’ high. It’s in the living room that’s 25’x12’. It’s immediately visible once enter the front door. Living room doubles as dining room.

Thank you all for the input. I've learned so much here. Decided to tile the brick section with cement-look large format tiles and change the mantel to a slimmer natural stained white oak beam. My ceiling is 8 ft tall, so build a floor-to-ceiling fireplace will overwhelm the room. I will post the picture once the project is done.

And a FYI, I got an estimate from an experienced masonry contractor for a floor-to-ceiling brick/ or stone fireplace. For demo and complete rebuild a new 8 ft x 6ft fireplace, the estimate is $3,000, labor and material. Of course, you will need to add the purchase of the FP insert and associated labor for a fireplace contractor (gas) or electrician (electrical FP).