Claim Your Moving Expenses
With growing transaction expenses in real estate, most could use a financial break when changing houses. Luckily for eligible Canadians, some moving expenses can be claimed. Don’t wait for tax time to roll around to start getting your moving expenses in order. Here are a couple tips to consider when planning your move to help you get the most from your taxes.
Check Your Relocation’s Eligibility
Not all types of moves are deductible. To be able to claim your moving expenses, you have to be relocating for work, your own business or to attend a post-secondary school full time. If you’re moving for work, you wouldn’t be able to claim expenses that were paid for by your employer.
Your move must also meet the distance threshold. Your new home must be at least 40 kilometers closer to your new place of work or school than your old home. Luckily, the distance is measured by the shortest normal route possible for the public to commute.
Unless you’re moving internationally and remaining a resident for Canadian tax purposes, your old and new homes must be located in Canada. And of course, you must ordinarily reside at your new dwelling to even put these factors into consideration. As defined by the Supreme Court, this means that “one is ‘ordinarily resident’ in the place where in the settled routine of his life he regularly, normally and customarily lives.” Something to consider if you’re planning on keeping your old home.
Look At Your Move Date
You’re considered a resident of the province as of where you live on December 31st. If you’re planning a move to a lower-taxed province, consider moving before the end of the year to take advantage of your new province’s lower tax rates. The same applies to those looking to move to a higher-taxed province. Delaying your move to the new year could save you money.
You have to earn income from employment, self-employment, school, but not investment income at your new location to be eligible to claim your moving expenses. You can only deduct the amount of income earned in the new location in the year you moved. If you haven’t earned enough, you can carry the excess amounts forward to the following year.
If you’re planning a do-it-yourself move, consider hiring someone 18 or older to help with the move. As long as it’s a qualifying moving expense, you’ll be able to deduct the cost. The amount will have to be reported as income, but so long as their income is under the basic personal amount for the year, they won’t have to pay taxes on the amount paid to them.
Keep a Record of All Your Expenses
From your transportation and storage costs to the fee for changing your driver’s license, keep all receipts handy for tax season. If your move is qualifies, there are number of expenses you can file.
- 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.
- 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.
- 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 including changing your address on legal documents, replacing driving licenses, utility hook-ups/disconnections, etc.
- 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.
Generally, you cannot deduct the cost of moving a mobile home. However, if you have personal effects in a mobile home when it is moved, you can deduct the amount it would have cost to move those personal effects separately.
Every penny saved goes a long way when moving into a new home. Taking the time to see if your moving expenses qualifies is one more way to take the stress out of moving. For complete information about claiming moving expenses on your taxes, visit Canada Revenue Agency.