Tax Deductible Relocation Expenses Explained

Many Canadians relocate their primary residences each year. Some people may be allowed to deduct some relocation expenses from their personal tax returns at the end of the year. There are qualifying requirements and specific categories of expenses that can be deducted, therefore not everyone is eligible for the deduction.

Who are eligible to claim?

Individuals who have moved and established a new home to be employed or to run a business at a new location are entitled to deduct eligible moving expenses. You must be a deemed or factual resident of Canada, and the move must go from the place where you ordinarily reside to another place where you will ordinarily reside.

You may be eligible for the deduction if the new home is at least 40 kilometers closer to your new place of work than the prior location. This covers individuals who have moved within Canada, from outside Canada to a new work location in Canada, from Canada to a new work location outside of Canada, and certain individuals who moved between two locations outside of Canada. Full-time students may also qualify to deduct the eligible moving expenses from part of their scholarships, fellowships, bursaries, and research grants that are required to be included in income.

What moving expenses are taxable?

Good news! The Canada Revenue Agency allows you to deduct a wide range of expenses on your tax return as “moving expenses.” Some of the eligible moving expenses are:

  • Transportation and storage of your household belongings. You can either rent a truck yourself or hire a moving company.
  • Moving expenses flights. If your move involves flying to another part of the country, you can claim your tickets. Or if you are driving to your new home, you can calculate your deduction based on the number of kilometers traveled.
  • Temporary living expenses. If you need to get a hotel or AirBnB because your new home is not yet available, you can claim up to 15 days of expenses
  • The cost of canceling the lease on your old home. If you have to pay rent because your lease goes past your moving date, you can include this amount in your expenses.
  • The cost of replacing your driver’s license, disconnecting utilities at your old home, and connecting services at your new one.
  • The cost to maintain your old home while you are trying to sell it. You can claim up to $5,000 for mortgage interest, property tax, insurance, and heating. However, you can’t expense this if you are renting your home.
  • The cost of selling your old home, including real estate fees, legal fees, and any penalties from canceling your mortgage before its maturity date.

It’s important to take note that there are also moving expenses that are not tax deductible

How do you claim the expenses in your returns?

To calculate all of the moving expenses you can claim on line 21900 of your T1 return, use form T1-M, Moving Expenses Deduction. 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; however, you must keep these receipts and documents on hand in case the Canada Revenue Agency requests that you do so.

Is it worth claiming moving expenses?

Absolutely!  The moving expense deduction can help you reduce your taxable income. You are eligible if you relocate to start a new job, study full-time at a post-secondary institution, or are self-employed. For more information, see the CRA moving expense form.

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