I’m Moving; Can I Deduct My Moving Costs?

By Randall Orser | Personal Income Tax

Happy family with kids moving into a new homeYou can deduct moving expenses when you move to start a new job, business, expand your existing business or are going to school. However, as with everything taxes, there are restrictions. You must have moved at least forty (40) kilometres closer to the new place of business, work or school. So, if you move from Vancouver to Surrey in British Columbia where I’m from, that’s actually only thirty (30) kilometres and you cannot deduct your moving expenses. Now, if you moved from Vancouver to Maple Ridge, you can, as Maple Ridge is forty-five (45) kilometres away.

You cannot deduct your moving expenses from any other type of income, such as investment income or employment insurance benefits, even if you received this income at the new location.

If you received a reimbursement or an allowance for your eligible moving expenses you can only claim your moving expenses if you include the amount you received in your income or if you reduce your moving expenses by the amount received. Canada Revenue Agency (CRA) may ask you to provide a letter from your employer stating that you were not reimbursed for the moving expenses you are claiming.

You need to fill out form T1-M Moving Expenses Deduction and file that with your return. If you electronically file, you don’t need to send receipts; however, keep your receipts just in case CRA asks to see them.

If your net moving expenses (line 21 of For T1-M) that you paid in the year of the move are more than the net eligible income (line 22 of Form T1-M) earned at the new work location in that same year, you can carry forward and deduct the unused part of those expenses from your employment or self-employment income earned at the new work location in the following years. If your eligible moving expenses were paid in a year after the year of your move, you can claim them on your return for the year you paid them against employment or self-employment income earned at the new work location. This may apply if your old residence did not sell until after the year of your move. If this is the case, CRA may ask you to submit Form T1-M with the receipts and explain the delay in selling your home.

You cannot carry back moving expenses to a previous year. For example, if you paid moving expenses in 2013 for a move that occurred in 2012, you cannot claim the expenses paid in 2013 on your 2012 return, even if you earned employment or self-employment income at the new location in 2012.

What are Eligible Moving Expenses?

Transportation and storage costs (such as packing, hauling, moving, in-transit storage, and insurance) for household effects, including items such as boats and trailers.

Travel expenses, including vehicle expenses, meals, and accommodation, to move you and members of your household to your new residence. You can choose to claim vehicle and/or meal expenses using the detailed or simplified method.

Temporary living expenses for up to a maximum of 15 days for meals and temporary accommodation near the old and the new residence for you and members of your household. You can choose to claim meal expenses using the detailed (keep all your receipts) or simplified (claim a flat rate per person) method. If you choose the simplified method, although you do not have to submit detailed receipts for actual expenses, we may still ask you to provide some documentation to establish the duration of the temporary lodging.

Cost of cancelling a lease for your old residence, except any rental payment for the period during which you occupied the residence.

Incidental costs related to your move, which includes the following:

  • Changing your address on legal documents;
  • Replacing driving licences and non-commercial vehicle permits (not including insurance); and
  • Utility hook-ups and disconnections.

Cost to maintain your old residence (maximum of $5,000) when it was vacant after you moved, and during a period when reasonable efforts were made to sell the home. It includes the following:

  • Interest;
  • Property taxes;
  • Insurance premiums; and
  • Heat and utilities expenses.

Cost of selling your old residence, including advertising, notary or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity.

Cost of purchasing your new residence if you or your spouse or common-law partner sold your old residence as a result of your move.

Moving can be a costly expense, and it’s good to know that you can deduct your expenses. Just remember to keep all your receipts and check with your tax preparer and let them know you have moving expenses. Your tax preparer will need your old address as that needs to be on the T1-M form.

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