It’s the New Year, which means that many of us have been looking back at our holiday spending records, trying to make sense of our finances moving toward tax season in the spring. You’re not alone.
Tax season can be particularly daunting if you’re planning - or have recently completed - a big move. We all appreciate the opportunity to save a few bucks, but taxes are one of those things that many of us simply brush under the rug and take as it comes. It’s an intimidating topic that garners a certain amount of blissful financial unawareness, but if you do a bit of digging, you’ll find that you can claim some of your moving expenses and have yourself some of your hard-earned money.
Line 219 of your personal income tax form is what you’re looking for, and in this post, we’ll debunk a few of the ways you can save on moving expenses.
Can you Claim Moving Expenses?
The short answer is yes! Under Line 219, you may claim moving expenses if you have moved and established a new home to be employed or run a business at a new location, or in you’ve moved to become a full-time student enrolled at a post-secondary program at a university, college, or other education institution.
In order to qualify for these claim, your new home must be at least 40 km closer to your new work or school. Eligible people must fill out Form T1-M Moving Expense Deduction to calculate the moving expenses deductions that you will be able to claim on Line 219.
What Moving Expenses Can You Deduct From Your Income Tax?
Before you start making a list of all the things and expenses you’ve accumulated during your move, it’s important to first know what you can and cannot reasonably deduct - as these differ depending on whether or not you’re employed or self-employed, or a full-time student.
Transportation & Storage
For household items including boats and trailers, you may claim costs like:
- Packing materials
- Hauling (truck rentals)
- Mover services
- In-transit storage
- Insurance costs
You may also claim travel expenses including vehicle expenses, meals, and accommodations required to move you and your household members to your new home. For these deductions, there are two methods: detailed and simplified.
Under the detailed method, you must keep and track all receipts to claim the actual amount you’ve spent on meal expenses and vehicle expenses. For the simplified method, you may claim a flat rate for each person for meal expenses. Though you won’t have to keep receipts, you may be required to provide some documentation of your purchases. For vehicle expenses, the simplified method means you’ll multiply the number of km travelled by the cents/km rate for the province/territory where your move began.
For a maximum of 15 days, you may claim temporary living expenses for meals and lodging associated with travel.
You can also qualify to claim the cost of cancelling the lease of your old home, except any rental payments for the period when you occupied the property. You can’t, however, claim rental payments for the period of time before the cancellation of your lease - regardless of whether you occupied the residence or not.
You can also claim costs for miscellaneous costs associated with moving like:
- Changing addresses on legal documents
- Updating and replacing drivers licences and non-commercial driving permits
- Utility hook ups and disconnections.
Up to a maximum of $5,000, you may claim the cost of maintaining your home after you’ve moved during a period when reasonable attempts to sell the old residence are made. These costs can include things like interest, property taxes, insurance premiums, costs of utilities.
This can also include real estate selling costs like marketing, advertising, notary fees, legal fees, real estate commission, and even mortgage penalty fees when mortgages are paid off before the period of maturity.
What Can’t You Deduct?
For all of the things you can deduct, there’s also a considerable list of things that you cannot deduct on Line 219 - all of which we believe are fairly understandable. You cannot deduct:
- Renovation costs to help your old home sell for more
- Losses from the sale of your home
- Travel expenses during house-hunting trips
- Travel expenses for job hunting in your new city or town
- Value of possessions your movers cannot transport
- Ammunition, plants, chemicals, etc
- Expenses to claim or repair your former rental home
- Expenses to replace personal-use items:
- Firewood, curtains, sheds, etc
- Mail forwarding costs
- Costs incurred when you opt to delay the sale of your old home until investment purposes improve (real estate market picks up)
- Mortgage default insurance
Finally, moving expenses are non-deductible when your new home is not 40 km closer to your new workplace or school, and for expenses that were reimbursed by your new employer - perhaps as a signing bonus, etc. You may also not claim expenses for things that do not have appropriate supporting documentation.