Moving Expenses

Moving Expense Deductions: How to Save Money on Your Move

We know that moving can be a stressful and expensive process, but we have some good news for you. The Canadian government offers valuable support through moving expense deductions, which can help reduce some of the financial burden. These deductions allow you to claim various costs associated with your move, including transportation and storage of household goods, travel expenses, and even the fees for cancelling your gym membership (since you probably won’t be going there anymore).

Qualifying for Moving Expense Deductions

To be eligible for these deductions, you must have moved at least 40 kilometers closer to your new workplace or business location. If your move meets this criterion, you can claim related expenses as a tax deduction on your income tax return.

What Expenses Are Eligible?

Here’s a breakdown of the qualifying moving expenses you can deduct:

Transportation and Storage Costs: Expenses related to moving your household goods and personal effects.

Travel Expenses: Costs for you and your family, including meals and lodging during the move.

Lease Cancellation Fees: If you cancel a lease as part of your move, you can deduct this expense.

Additional Moving Costs: Includes updating your address on legal documents, obtaining new driving licenses, vehicle permits (excluding insurance), and connecting or disconnecting utilities.

Maintenance of Your Old Home: You can claim up to $5,000 in maintenance costs while your previous home is for sale.

Selling Costs for Your Old Home: Advertising, notary or legal fees, real estate commissions, appraisal fees, and mortgage penalties incurred from paying off your mortgage early.

Buying Costs for Your New Home: Notary or legal fees and taxes related to the registration or transfer of title (excluding GST/HST).

How to Claim Your Moving Expenses

There are two methods to calculate your moving expenses—simplified and detailed methods:

Simplified Method: You can claim a flat rate per person per day for travel-related expenses.

Detailed Method: If you want to claim the actual expenses, you will need to keep detailed records and receipts for all related costs.

To claim these deductions, you’ll need to complete Form T1-M (Moving Expenses Deduction) and attach it to your income tax return. This will allow you to claim the eligible expenses on Line 21900 of your tax return. Be sure to retain official receipts for at least six (6) years if you are claiming expenses under the detailed method.

If your employer reimbursed you for moving expenses, you must reduce your claim by that amount. If the reimbursement exceeds your total moving expenses, you cannot claim any deductions.

Conclusion

By understanding moving expense deductions and keeping accurate records, you can save money on your taxes, helping to ease the financial strain of relocating. These deductions can make a difficult move more manageable, allowing you to focus on settling into your new home instead of worrying about the costs. With the right preparation, you can make your move smoother and less stressful, while saving on taxes and getting a fresh start in your new environment.

For more information, visit the official page on moving expenses: Canada Revenue Agency - Moving Expenses