Moving can be stressful and costly, especially when moving long distances. While there are a number of reasons for families and individuals to move to a new location, there are some situation in which tax relief is available for taxpayers to help minimize the costs associated with moving.
If you are moving in 2018, or already have, you may be able to deduct eligible moving expenses if one of the following is true:
- You moved 40 km or more to be closer to a new job location whether due to a work transfer, newly found employment or to become self-employed.
- You are a student who moved 40 km or more to be closer to a summer job.
Moving expenses can be deducted by renters and homeowners but the amount deducted cannot be greater than the amount earned at the new location in any given year. However, it is possible to carry over moving expenses and deduct them from income earned at the new location in future years.
Allowable Moving Expenses
Eligible expenses are subject to reasonableness and include:
Traveling Expenses – all members of the family are not required to travel together at the same time.
- Vehicle expenses.
Transportation and Storage – for personal belongings including boats and trailers.
- In-Transit storage.
Temporary Expenses – for up to 15 days near the old or new residence.
- Lease cancellation charges.
- Notary or legal fees.
- Real estate commissions.
- Mortgage penalties.
- Cost of disconnecting utilities.
- Legal or notary fees for the purchase of the new residence.
- Taxes paid for the transfer or registration of title to new residence.
- Cost of hooking up utilities.
Maintenance on Vacant Home – these costs are allowed so long as efforts are being made to sell the home.
- Property taxes.
- Insurance premiums.
- Heat and utilities.
NOTE: these eligible expenses are limited to a total of $5,000.
- Cost of changing address on legal documents.
- Replacing driving licenses and non-commercial vehicle permits.
While many expenses are allowed, there are a number of costs that remain ineligible for the moving expense deduction. These include:
- Work done to the old residence in preparation for selling.
- Losses on sale of residence.
- Job-hunting expenses.
- House-hunting trips.
- Cleaning and repair expenses in a rental unit.
- Personal use items such as curtains and blinds.
- Mail forwarding.
- Mortgage default insurance.
Claiming Eligible Expenses
To claim eligible expenses, you are required to maintain supporting documentation, specifically receipts for the expenses paid. While the Canada Revenue Agency (CRA) doesn’t require you to file these with your return, they will expect you to produce them, if they are requested.
There is, however, an alternative method, which does not require keeping track of your receipts, and that is claiming a standardized amount approved by the CRA and applicable legislations.
This method allows taxpayers to claim a flat rate for moving related expenses. Using the flat rate method, each family member can claim the following:
- Meals - up to $17 per meal per day.
- Accommodations - up to $51 per day.
- Driving – applicable provinces per kilometer rate (if moving provinces, you use the rate for the province you are moving from).
Please note that the rates provided above are for 2017, and will likely change for 2018. The updated rates will be posted on the CRA website in early 2019.
Calculating your moving expense deduction is not complicated but it is comprehensive. To find out more about the moving expense deduction, or for help calculating your deduction, contact our team today!