Moving Expenses and Tax Deductions

It’s that time of year again…no not Christmas (I wish). It’s tax season. It’s time to get organized to file your taxes on time and with the maximum deductions possible. Moving can be one of those tax deductions. Below are general guidelines for moving within Canada.

Can you deduct moving expenses on your income tax?

As with all things government related, there are conditions that need to be met in order to receive a tax deduction. You can claim eligible moving expenses only under certain circumstances. Generally speaking, the law applies to a move that was made as a result of work or to run a business at a new location. Example: If the company you work for transfers you to another location and you move to be closer to that employer’s new location, this is deductible. This could mean moving to another province or to a company’s new location outside town. The only requirement for distance is that your new home must be at least 40 kilometers closer to the new place of work. And this is not measured by how the crow flies; it is based on utilizing the shortest, usual, public route.

Are you a Student moving to be closer to your place of education? This is also tax deductible. The rules that apply above also apply to students who move to be closer to the school they attend. You must be attending the school full time and enrolled in a post-secondary program at a university, college or other legal educational institute.

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How to Take a Moving Tax Deduction

Of course, there is always fine print to these general rules. These rules only apply to Canadian Residents, either deemed or factual. The qualifications for your residency status can be quite complex. Rules regarding this can be found here. The form you must submit to receive these deductions is Form T1-M, Moving Expenses Deduction. This form is used to calculate the amount of the deduction on line 219 of your tax return.

Did your company or business reimburse you for your move? This is income and must be reported on your income tax. However you can still claim moving expenses; but this income must be included. If you moved late in the tax year and started work at that new company and the income you earned was less than the moving expenses, you can carry forward the unused expenses to the next tax year. So keep track and don’t lose those expense receipts for moving. You can also claim the expense the year after your move if; for example, your old residence did not sell until after the year of your move. For example, if you moved in 2015, but did not pay expenses until 2016, you can claim the expenses for the 2015 move on your 2016 tax return.

What are eligible moving expenses?

Items you can use for tax deduction must be related to the move such as:

  • This means movers, rental trucks, use of your personal vehicle for the purposes of the move, trailers ( including boat or recreational trailers)
  • Including self-storage, storage at the mover’s warehouse, in-transit storage or any portable storage or container.
  • Travel expenses. All travel expenses associated with the move are deductible such as use of your vehicle, mileage, gas, installation of tow hitch.
  • Meals and accommodation for you and your family, hotel costs, rental or temporary housing costs for up to 15 days
  • Insurance such as extra cargo insurance.
  • Packing and wraping supplies, boxes, bubble wrap, moving blankets, boxes or reusable rental packing boxes.
  • Cost of cancelling your lease or temporary new lease.
  • Cost of selling your old residence. This includes real estate commissions, any advertising you did to sell your home, legal fees, any mortgage pre pay penalty.
  • Cost of purchasing your new home as above.
  • Maintaining your old residence. If it was vacant after your move and during the period you were reasonably trying to sell it. You can right off interest, insurance premiums, utilities, property taxes. There is a maximum on this of $5,000.
  • Incidental costs related to the move such as cost to change address, replacing driver’s license and noncommercial vehicle permits. Costs associated with connecting utilities at your new residence.

Moving Expenses you can’t deduct

There are also a number of items you cannot use as a tax deduction. So make note of these and don’t try to submit them. You only open yourself up to a potential audit. As stated above you cannot get a tax deduction if your move is less than 40 kilometers closer to you job or school. If your employer reimbursed you money for moving, those expenses are not tax deductible. Don’t forget you must keep a record of all expenses for at least three years (in case of audit). The cost of moving a mobile home is not deductible; however, you can deduct the estimated value of moving the personal affects that are in the mobile home. Other non-deductible expenses are:

  • Mortgage insurance
  • Any travel expenses to related to both house hunting and job hunting
  • Any loss you took selling your house. This also includes any expenses you incurred fixing up your home to make it more saleable
  • Any cost that you may have incurred because you delayed selling your home for whatever reason. Such as waiting for the market to improve or for investment purposes.
  • Any expense you incurred to clean or repair damage to a rented residence
  • You cannot deduct the replacement of any personal items such as tools, tool sheds, window coverings, floor coverings etc.…
  • Mail forwarding cost is not deductible
  • Any items that a mover cannot take such as gas cans, propane, guns, ammunition, paints and chemicals, plants, frozen foods etc.…

These are a list of the most obvious and common deductible and non-deductible items related to moving for work or education. For a more detailed list and additional information visit the Canada Revenue Agency website.

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Moving Tip

  • Get rid of the junk! Get rid of anything you don’t need or want, it will make packing that much easier and save you money.The more stuff you have will increase the time and or weight of the move and will cost you more money!
  • Do not move jewelry, money, coin collections, etc. Keep these items in your possession.
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