A heat pump system (10) includes a compressor (20), a reversing valve (30), an outdoor heat exchanger (40) and an indoor heat exchanger (50) coupled via refrigerant lines (35, 45, 55) in a conventional refrigeration circuit, and a refrigerant-to-water heat exchanger (60). In the air cooling with water heating mode, the air heating with water heating mode and the water heating only mode, water from a water reservoir (64), such as a storage tank or swimming pool, is passed through heat exchanger (60) in heat exchange relationship with refrigerant passing through line (35). A refrigerant reservoir (70) may be provided for use in refrigerant charge control. A refrigerant line (71) couples reservoir (70) to the refrigerant circuit intermediate the outdoor and indoor heat exchangers for directing liquid refrigerant into the reservoir (70) and a refrigerant line (73) couples the refrigerant circuit upstream of the suction inlet to the compressor (20) for returning refrigerant to the refrigerant circuit. A controller (100) controls flow into and from the refrigerant reservoir (70) through selective opening and closing of control valve (72) in line (71) and control valve (74) in line (73).