Tax Treatment of Moving Expenses

Who can deduct moving expenses?

You can deduct eligible moving expenses from income you earn at your new location if you move tostart a job or a business, or attend courses as a full-time or co-operative student at a college, university, or other institution offering post-secondary education. Your new home must be at least 40 kilometres (by the shortest usual public route) closer to your new school or place of work than your previous home.

Are you employed or self-employed?

If so, you can deduct eligible moving expenses from employment or self-employment income you earn at the new location:

If your moving expenses are more than the income earned at the new location in the year you move, you can deduct the unused portion of those expenses from employment or self-employment income earned at the new location in the following year. You cannot deduct your moving expenses from any other type of income, such as investment income or Employment Insurance benefits, even if you receive this income at the new location.

If you receive a moving allowance or grant, or are reimbursed for your expenses, you can only deduct your moving expenses if you include the amount you receive in your income, or if you reduce your moving expenses by the amount reimbursed

Expenses you can deduct

You can deduct reasonable amounts that you paid for moving yourself, your family, and your household effects. Not all members of your household have to travel together or at the same time.

Eligible moving moving expenses include:

travelling expenses, including automobile expenses, meals and accommodation (remember to keep receipts) to move you and members of your household to your new residence transportation and storage costs (such as packing, hauling, in transit storage, and insurance) for household effects, including items such as boats and trailers

costs for up to 15 days for meals and temporary accommodation near either residence, for you and the members of your household;

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

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

legal fees for the purchase of the new residence, as well as any taxes paid (other than GST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse are selling or have sold the old residence as a result of the move.

Expenses you cannot deduct

Some of the moving expenses that you cannot deduct include:

expenses for work done to make your home more saleable;

any loss from the sale of your home;

expenses for house hunting trips before you move;

the value of items movers refused to take, such as plants, frozen food, ammunition, paint, and cleaning products;

expenses for job hunting in another city (such as travelling expenses);

expenses to clean or repair a rented residence to meet the landlord's standards;

expenses to replace personal use items such as toolsheds, firewood, drapes, and carpets;

expenses to disconnect and reconnect utilities; costs of transformers or adaptors for household appliances; mail forwarding costs; and

costs incurred in the sale of your old home if you delayed selling for investment purposes or until the real estate market improved.

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.

mail forwarding costs

The above information is an excerpt from the Revenue Canada site on the T1M "Claim For Moving Expenses" PDF file. The file contains full information for the employed and self employed as well as student claim guidlines. Please access the the Revenue Canada PDF file for more information or link directly to the site.