Deducting moving expenses

If you moved to start a job, run a business or study full time at a college or university, and your new home is at least 40 kilometres closer to your new work or school, you can deduct many of the costs of the move. The catch: you can deduct them only from income you earn at the new location (or, if you moved to study, from the taxable part of your scholarships, bursaries and similar awards).

Who qualifies

Two tests apply:

• Why you moved. You moved to work or run a business at a new location, or to be a full-time student in a post-secondary program at a university, college or other educational institution.
• How far. Your new home is at least 40 km closer to your new work location or school, measured by the shortest public route.

The new home also has to become the place where you normally live; selling or renting out your old home (or advertising it) shows that. Generally the move has to be within Canada. A move to, from or outside Canada can qualify only if you’re a factual or deemed resident of Canada (or a full-time student) moving from where you normally lived to where you’ll normally live. Renting an apartment abroad for a temporary job while your family stays in your home in Canada doesn’t count.

Which income you can deduct them from

• Employees and the self-employed can deduct moving expenses only from employment or self-employment income earned at the new work location, not from investment income or Employment Insurance benefits.
• Full-time students can deduct them only from the taxable part of their scholarships, fellowships, bursaries, certain prizes or research grants, or from income earned at a new work location if they also moved to work, including for a summer job. Co-op students moving back after a work term can claim too. See students and taxes.

If your employer reimbursed you or paid an allowance for the move, you can claim only if you include that amount in your income or subtract it from your expenses.

Costs you can claim

You can claim most of what you paid to move yourself, your family and your household items:

• Transportation and storage: packing, hauling, movers, in-transit storage and insurance for household items, including boats and trailers.
• Travel to the new home, including vehicle expenses, meals and lodging. Claim actual costs with receipts, or use the CRA’s simplified method: a flat rate per meal and a cents-per-kilometre rate for the province or territory where the trip began.
• Temporary living expenses for up to 15 days: meals and temporary lodging near the old or new home.
• Cancelling your old lease, but not rent paid before the lease ended.
• Incidentals: changing your address on legal documents, replacing driver’s licences and non-commercial vehicle permits (not insurance), and connecting or disconnecting utilities.
• Keeping your old home while it’s empty, up to $5,000 in total: interest, property taxes, insurance premiums, heating and utilities while you were making reasonable efforts to sell it. Not for any time it was rented out, or while you or anyone who lived with you before the move still lived there.
• Selling your old home: advertising, notary or legal fees, real estate commission and a penalty for paying off the mortgage early.
• Buying the new home, if you or your spouse or common-law partner sold the old one because of the move: legal or notary fees, and taxes (other than GST/HST) to transfer or register the title.

Costs you can’t claim

• work to make your old home easier to sell, or a loss on the sale
• house-hunting or job-hunting trips
• the value of things the movers wouldn’t take, such as plants, frozen food and paint
• cleaning or repairing a rented home to the landlord’s standards
• replacing personal items such as drapes and carpets
• mail forwarding
• selling costs if you delayed the sale to wait for a better market or for investment reasons
• mortgage default insurance

When and how you deduct them

Claim expenses in the year you paid them. If they’re more than your eligible income at the new location that year, carry the unused part forward and deduct it from the same kind of income in later years. Costs paid in a later year (say your old home sells the year after you move) go on that later year’s return. You can’t carry moving expenses back.

Fill out Form T1-M, Moving Expenses Deduction, for each move and enter the result on your return (line 21900). Keep your receipts; the CRA may also ask for a letter from your employer confirming you weren’t reimbursed.

If you live in Quebec

The Quebec return has a similar deduction, with the same reasons for moving and the same 40 km test, claimed on Form TP-348-V. The difference is for students: on the Quebec return, a student who moved to study can deduct moving expenses only from the net research grants they received.

In short

• Move for work, a business or full-time post-secondary studies, and end up at least 40 km closer.
• Deduct the costs only from income earned at the new location (or, for students, taxable awards), and carry forward the rest.
• Keep receipts, and use Form T1-M.