Moving for work? Don’t forget to claim your moving expenses
So long Ontario and BC… Alberta and Atlantic Canada are luring Millennials and Gen Zs in record numbers, with that rare combination of good job prospects and, with home prices that are still within reach, a decent shot at home ownership.
The latest figures from Statistics Canada show 50,000 young families per year are leaving Ontario and BC to live and work in Alberta and Atlantic Canada, where they can attain affordable housing and, in some cases, work at home. In addition, every year there is a new cohort of college and university graduates who are following job prospects in their chosen fields, which may lead them to other provinces and cities far from home. Surprisingly, however, many of these young, aspiring homeowners are leaving money on the table by not claiming their moving expenses.
“Hold on…I can claim my moving expenses?!?”
Yes, under certain circumstances, you can, and it can add up to some pretty hefty tax savings. Leaving housing and rent issues aside for the moment let’s talk about the tax savings of such a move which is often overlooked on personal tax returns.
Any taxpayer can claim a deduction for moving and relocation costs if their new home is at least 40 kilometres closer to their new job than their previous location. Eligible moving costs include actual moving expenses and transportation – most commonly, the cost of professional movers, packing supplies, storage, insurance and the cost of renting a truck. All of these expenses can be deducted on your personal tax return. Temporary living expenses for a maximum of 15 days and gas expenses can be claimed if you move yourself, as well as the cost of hotels and meals from the trip to the new location – make sure to keep all the receipts as proof of these deductions. You can also deduct the cost of a flight to your new city or town and the cost of shipping your car to the new location.
Note: all of these moving related costs are to be deducted against the income earned from the new job. However, according to CRA: “If you received a reimbursement or an allowance from your employer for your eligible moving expenses, you can only claim your moving expenses if you include the amount you received in your income or if you reduce your moving expenses by the amount received.”
If you had a home (unlikely if you fit the profile above) and are moving the requisite distance for a new job, you can deduct all real estate commissions, mortgage penalty and interest, advertising expenses, and legal fees for selling your previous home or purchasing a new home. In addition, you can deduct the cost to maintain your previous home when vacant (to a maximum of $5,000) after you moved, and during a period when reasonable efforts were made to sell the home. Most commonly these are property taxes, insurance and utilities. Don’t try to claim the travel costs for a job interview and the costs of searching for your home on your personal tax return – these will be denied.
If you’re contemplating a move or a purchase, in any city or province, reach out to a Mortgage Intelligence mortgage professional who can provide valuable insight and guidance throughout the entire process, starting with an assessment of your situation and an understanding of exactly what you can afford.