Moving Expenses Part 2: What’s Deductible and What’s Not?

Last week Knowledge Bureau Report discussed who’s eligible to make a moving expense claim. This week: what’s deductible and what’s not?

Most expenses for moving to a new location to earn income from employment or self-employment are eligible to claim on the tax return. They can include the following:

• Selling the Old Home. Costs of selling the former residence, including

• real estate commissions
• penalties for paying off a mortgage
• legal fees
• advertising costs

• Waiting to Sell the Old Home. Costs of keeping a vacant old residence (to a maximum of $5,000) while actively attempting to sell it, including:

• mortgage interest
• property taxes
• insurance premiums
• heat and power

• Purchasing the New Home. Expenses of purchasing the new home (as long as the old home was owned ), including:

• transfer taxes
• legal fees

• Costs en Route. Temporary living expenses (meals and lodging) for up to 15 days may be claimed.

• Removal and Storage Costs including:

• insurance for household effects
• costs of moving a boat, trailer, or mobile home (to the extent the costs of moving the mobile home do not exceed the costs of moving the contents alone)

• Transportation and Other Costs:

• costs of meals en route (100%; no 50% restriction)
• cost of cancelling an unexpired lease
• cost of revising legal documents to show the new address, replacing drivers’ licenses and auto permits, cost of utility connections and disconnections

So what’s off limits? A tax auditor will require removal of the following costs if you claim them on your return:

• expenses to make the former property more saleable
• losses on the sale of the former property
• expenses incurred before the move (such as house hunting or job hunting)
• value of items that could not be moved (plants, frozen foods, paint, cleaning products, ammunition, etc.)
• expenses to clean a rented residence
• replacement costs for items not moved, such as tool sheds, firewood, drapes, etc.
• mail forwarding costs
• cost of transformers or adaptors for household appliances
• GST on new residence
• expenses that are reimbursed

Moving is usually a big, detailed and stressful event. If that’s your challenge over the holidays, do take the time to count your blessings along the way. More benefits are still to come with an increased tax refund in the spring, if you can remember to save receipts, and then retrieve them, too!

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