Please comment on this wiring approach
I am putting in a small bathroom. Because it will be in a separate, studio building and not used much, I plan to install an on-demand water heater. The heater requires a pair of 8-2 w/g cables and two, 40 amp, double pole breakers in the subpanel. I also know I need a separate 20-amp circuit to service the receptacles in the bathroom. Here is what I am thinking of doing.
Because running and fishing wire will be a challenge, I'd like to minimize the number of cables. I'm thinking of running two 8-3 cables from my subpanel to a junction box close to the heater. In the junction box I would remove the outer jacket from the two 8 gauge cables, and split off one conductor from each to which I would pigtail 12 gauge Romex; this would be my separate 20 amp circuit. I would also connect the ground wire in the 12 gauge Romex to one of the grounds in the 8 gauge cables. The remaining two pairs of the 8 gauge, along with the two 8 gauge grounds, would continue out of the junction box through conduit or armored cable for a foot or two where they would be connected to the heater. Back In the subpanel, the two 8 gauge conductors I split out for my 20 amp circuit would be protected by a 20 amp breaker. Is this ok? And particularly, do I need to run a single ground wire back from this junction box to the breaker box, or is it ok to just have a ground for the 20-amp circuit that starts in the junction box where it would be connected to one of the 8 gauge grounds that started at the subpanel?
Any thoughts are appreciated. Thanks.