Moving can often be expensive. Thankfully, the CRA lets you deduct some of those expenses on your tax return under certain circumstances. Here's how to deduct moving expenses on your taxes.
Who can deduct moving expenses on taxes?
The self-employed can deduct moving expenses if you've moved and established a new home to work or run your business at a new location. Employed taxpayers can qualify for this deduction if your new home is at least 40 kilometres closer to your new work. Your new place also shouldbe where you ordinarily reside. Thus, it can't be a part-time home, a vacation property or a rental property.
What moves are eligible?
Assuming you hit the 40-kilometre threshold, most moves within Canada are eligible. Moving to or from Canada may qualify if you are:
- A full-time student or a deemed resident of Canada and
- You moved from your ordinary residence to live in another place that is your primary home.
What if I received a moving reimbursement?
Employed taxpayers who received a moving reimbursement or allowance may still deduct moving costs. You can only claim the expenses that exceed the amount of your allowance or reimbursement.
How much can I deduct for moving expenses?
You can deduct moving expenses from your employment or self-employment income. You cannot deduct these costs from income like investment income or employment insurance benefits.
What are some eligible moving expenses I can deduct?
Some moving expenses you can deduct are:
- Travel expenses: the costs for moving you and household members to the new home. Qualified deductions are vehicle expenses, lodging, and meals associated with the move.
- Transportation and storage: charges for moving the items to your new dwelling. Examples include hauling, movers, insurance, packing and more.
- Costs for cancelling the lease: this doesn't include any rental payments for when you occupied the residence. You can't claim rental payments for periods before you cancelled the lease.
- Temporary living expenses: You can declare meals and temporary accommodations for you and your household members for a maximum of 15 days.
- Maintaining your old home: the cost to keep up your previous residence after you moved. You must make a reasonable effort to sell the household. These costs include interest, property taxes, utilities and property taxes. The maximum amount you can claim for this is $5,000.
- Expenditures tied to selling your old house: this includes real estate commissions, mortgage penalties, advertising and more.
- Incidental moving costs: this includes other moving-related expenses like utility hook-ups and disconnects, change-of-address charges and more.
You can claim these expenses on the tax return for the year you paid them. Additionally, you can carry forward the moving expense deduction if your qualified moving expenses are more than that year's net eligible income. Beware that you cannot carry back the moving expense deduction to previous tax years.
What tax form do I use to deduct moving expenses?
You can claim a deduction for eligible moving expenses by completing Form T1-M.