Each year, many Canadians move their primary residences. If you’re one of them and moved to be closer to your job, start a new business, or attend college or university full-time, you could be in luck come tax time. Did you know that you could deduct most of your moving expenses or costs related to selling your home on your personal income tax return?
Read on to find out if you are eligible for this tax benefit and what items you can—and can’t—deduct.
- If you moved your primary residence for a new job, to run a business, or to go to school full-time, you can deduct eligible moving expenses.
- To qualify for the deduction, your new home needs to be at least 40 kilometres closer to your place of work than the prior location.
- Some moving costs are ineligible, such as if you incur a loss on the sale of your prior home.
Who can claim moving expenses?
Many Canadians could be eligible to claim moving expenses. However, eligibility requirements must be met, and only certain types of expenses can be deducted. For instance, if you move and establish a new home for employment purposes or to run a business at a new location, you’re entitled to deduct eligible moving expenses.
To qualify for the deduction, your new home needs to be at least 40 kilometres closer to your place of work than the prior location. This can include individuals who have moved within Canada, from outside Canada to a new work location in Canada, from in Canada to a new work location outside of Canada, or between two locations outside of Canada. However, you will need to be earning income following the move to your new location to deduct your expenses. If you do not have sufficient income in the year of the move, the deduction will carryforward; which means you can deduct the moving expenses the following year if you have enough income at that time.
If you’re a full-time student, you may also be able to deduct eligible moving expenses from part of your scholarships, fellowships, bursaries, and research grants that are required to be included in your income—even if you’re moving out of Canada for your post-secondary school education. But the rule is, per the Canada Revenue Agency (CRA), for anyone moving into or out of Canada, you must be a deemed or factual resident of Canada to qualify.
You also must have sufficient taxable scholarship income or T4/T4A self-employment earnings in the new location. If you do not have sufficient income in the year of the move, as with work situation above, the deduction will carryforward.
Important note: Don’t forget to enter your earned or taxable income you earn directly following the move on the entry field provided on your T1-M Form. T1-M form to input earned/taxable income following the move…
What type of moving expenses can I claim?
There are different types of eligible moving expenses you can deduct as determined by the CRA.
Transportation and storage costs are common, which include all movers, in-transit storage, packing, and insurance. Travel costs to the new location, including vehicle expenses, meals, and accommodations for you and your family are all eligible. (To claim vehicle or meal expenses, you must use either the detailed or simplified method when filing.)
Temporary living expenses (for up to a maximum of 15 days), including meals and accommodations for you and your family, can be deducted. Costs of cancelling a lease of your old residence and the expense to maintain it (maximum of $5,000) when it was vacant after you moved are also eligible.
Incidental costs, such as changing your address on legal documents, replacing driver’s licenses, vehicle permits, and utility hookups and disconnections are deductible—as long as they are related to the move. If you purchased or sold property as part of the move, you can deduct those selling costs, including advertising, legal fees, and real estate commission and mortgage penalties (if applicable).
What types of moving expenses are ineligible?
There are some types of moving expenses that are not tax-deductible. For instance, moving costs paid by your employer that are not a taxable benefit are not eligible.
And, while the costs of selling a house—such as agent and legal fees—are tax-deductible, any money you spend making the house more attractive to a buyer is not. If you sell your home because you have to move and incur a loss on the sale, that loss is not tax-deductible either.
For more information on ineligible expenses, the CRA offers a full list.
How do I claim moving expenses on my tax return?
Use Form T1-M, Moving Expenses Deduction to calculate all of the moving expenses that you can claim on line 21900 of your T1 return.You do not need to attach the T1-M Form to your return, nor do you need to attach all of the receipts and documents to support the claim. But you must keep these receipts and documents handy if the CRA requests them in support of your claim.
No matter your tax situation, we’ve got you covered.