This paper presents the development of a transcritical CO2 heat pump water heating system model incorporating analytical heat exchanger models and an empirical compressor model. This study investigated the effects of a suction line heat exchanger (SLHX) and once-through versus multi-pass water heating schemes. The once-through systems outperformed the multi-pass systems by 10% for the system without a SLHX and 15% with a SLHX. However, a gas cooler twice as large is required. The SLHX was shown to benefit system performance at higher evaporator temperatures with improvements of 16.5% for the once-through and 4% for the multi-pass systems. This study can be used to improve the design of microchannel based transcritical CO2 heat pumps; evaluate the impact of varying water inlet temperature, desired outlet temperature and evaporation temperature on system performance; and quantify the effect of differential diurnal electricity rates on system operating costs for these different operation schemes.