10 Eligible, Audit-Proof Moving Expenses to Claim
Taxpayers who moved in 2018 can take advantage of expense claims for lucrative tax breaks when filing their tax returns this year. However, there are some tricky rules that apply to eligible and ineligible moving expenses that must be considered in order to remain audit-proof with the CRA.
Components of this article were excerpted from Essential Tax Facts, 2019 edition.
Who qualifies to claim moving expenses? To qualify to claim moving expenses, a taxpayer must move at least 40 kilometres closer to the location where they earn income from employment or self-employment.
Students can often claim moving expenses to be in full time attendance at a post-secondary program at a university, college or other educational institution.
In addition, the taxpayer must stop working or operating a business at the old location, and establish a new home where they will reside with their family.
The following income sources earned at the new location will not be considered qualifying income for the purposes of claiming moving expenses:
- Investment income
- Employment insurance benefits
- Other income sources, except student awards (see below).
Checklist of Allowable Moving Expenses
All receipts for the following allowable moving expenses claimed must be kept
- Cost of selling the former residence, including real estate commissions, penalties for paying off a mortgage, legal fees, and advertising costs
- 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 and heat and power
- Expenses of purchasing the new home (as long as the old home was owned), including transfer taxes and legal fees
- Temporary living expenses (meals and lodging) for up to 15 days
- 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 do not exceed the costs of moving the contents alone)
- Transportation 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 driver’s licenses and auto permits, cost of utility connections and disconnections
- If the move is required by an employer and the taxpayer is forced to sell their home at a loss, it is possible to receive up to $15,000 in tax-free reimbursement of those losses, should the employer choose to assist. After this amount, one half of the reimbursement over $15,000 is tax-free.
- If a move requires leaving a vacant residence behind while it is up for sale, a taxpayer can up to a maximum of $5,000 as a moving expense for the costs incurred in the meantime, including mortgage interest, property taxes, insurance and utilities
Ineligible Moving Expenses:
The following expenses are not deductible:
- Expenses to make the former property more saleable
- Losses on the sale of the former property and 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 and cost of transformers or adaptors for household appliances
- GST/HST on new residence and expenses that are reimbursed
Note: Students claiming moving expenses may be affected by the rules which exempt scholarship, bursary and fellowship income after 2006 when they are full-time students. Since moving expenses are limited to taxable income from employment, self-employment, or scholarships, it is possible that students with non-taxable scholarships will be unable to claim moving expenses.
Additional educational resources: for more tips on remaining audit-proof with the CRA at tax time, pick up a copy of Essential Tax Facts, 2019 edition by Evelyn Jacks. Pre-order by calling 1.866.953.4769 today, and receive your copy after they arrive in our office on April 24.
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