When Can You Claim Moving Expenses on Your Taxes
The ins and outs of challenge moving expenses on your tax render
Jamie Golombek: Non all expenses associated with your movement may exist tax deductible, every bit a Quebec taxpayer learned in court final month
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If yous moved at some point this year, you lot may be entitled to a tax break for your moving expenses come tax time. But exist careful, because not all expenses associated with your move may be revenue enhancement deductible, as a Quebec taxpayer learned in court terminal calendar month. Before reviewing the specifics of her case, let's get over the rules for deducting moving expenses.
The rules
Under the Income Tax Act, you can write off your moving expenses if you moved for work, to run a business organisation or to be a full-fourth dimension educatee. To qualify, your new habitation must be at least xl kilometres closer to your new work or school.
Assuming you qualify, you can claim reasonable moving expenses that you paid for moving yourself, your family unit, as well every bit your household items. Eligible moving expenses include the obvious things, such as the costs of packing, hauling, movers, in-transit storage, and insurance for your household items, as well as travel expenses. These may include vehicle expenses, meals, and overnight accommodation to transport yous and your family to your new dwelling. Temporary living expenses for up to a maximum of fifteen days for meals and temporary lodging near the sometime and the new home are as well deductible.
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Only moving expenses can likewise include coincident costs such the toll of cancelling the lease for your old home every bit well as other incidental costs related to your movement, such as fees paid to change your address on legal documents, replace your driver'due south license and utility hook-ups and disconnections for either home.
You can also deduct the costs, upward to a maximum of $5,000, associated with your old home when vacant afterward you motility, provided you brand reasonable efforts to sell your habitation. These costs can include mortgage interest, holding taxes, home insurance premiums and the cost of heating and utilities.
Costs associated with selling your old dwelling house are too tax deductible, including advertising, notary or legal fees, real estate commissions, and any mortgage penalisation associated with paying off your mortgage before maturity. Similarly, costs associated with buying your new home, including legal or notary fees, every bit well equally any transfer taxes paid for the transfer or registration of title to your new abode, are also tax deductible.
Meal & vehicle expenses
When it comes to deducting your moving-related meal and vehicle expenses, y'all take two choices: the detailed method and the simplified method. If you lot choose the detailed method, you must keep all your receipts which allows you lot to claim the actual amount you spent.
On the other paw, if you lot choose the simplified method, you can only claim a flat daily rate, per person, for meals. For more than than a decade, that rate has been limited to $17 per meal, to a maximum of $51/24-hour interval, per person.
Similarly, if you choose to employ the simplified method to summate the corporeality to claim for vehicle expenses, multiply the number of kilometres you drove for the motility by the cents/km rate for the province or territory where the travel began. For example, for 2022 in Quebec, the amount was 50.5 cents per kilometre.
The case
In the recent instance, the taxpayer, a science editor with Quebec'southward Ministry of Sustainable Development, Environment and the Fight confronting Climate Change, deducted a variety of moving expenses on her 2022 tax return associated with her work-related transfer.
For more than ten years, the taxpayer worked in Montreal, where she endemic a condo. In Apr 2015, the taxpayer was transferred to Quebec Urban center and from April through June 2015, the taxpayer regularly made Quebec City-Montreal round trips because she still owned her Montreal condo.
Taxpayer'southward moving expenses
During these three months, the taxpayer incurred temporary living expenses while staying with friends in Quebec City for a total of 51 days, at a cost of $25 per dark. The taxpayer therefore deducted $25 per 24-hour interval for lodging (full of $1,275) as well equally $51 per mean solar day for food (total of $2,601) using the simplified calculation method described to a higher place.
In July 2015, the taxpayer purchased and moved into a condo in Quebec Metropolis where she incurred $8,770 in expenses for cleaning and repairs. Those expenses included: washing the condo, installing a washer/dryer, purchasing and installing light fixtures, laying ceramic in the kitchen, and purchasing an air conditioning unit. The taxpayer testified that she had to incur these expenses "to duplicate the quality of life she had in her Montreal condo."
The reassessment
The Canada Acquirement Agency allowed some of the taxpayer's moving costs, including: the cost of her mover ($one,702), travel ($131), hook-upward of utilities ($268), notary public fees ($i,845) and country transfer taxes ($ii,000). It limited her merits for meals and lodging to 15 days, allowing $25/twenty-four hour period ($375) for lodging and $51/twenty-four hour period ($765) for meals. It denied all other moving expenses.
The ruling
The taxpayer objected and the matter went to Revenue enhancement Court. While there was no doubtfulness that the taxpayer paid her moving expenses as the result of an eligible move, the simply effect was the acceptability of the various expenses she claimed.
While the list of eligible moving expenses contained in the legislation is not necessarily exhaustive, the judge quoted prior jurisprudence that found that for moving expenses to be deductible, those expenses "must pertain directly to a move and cannot exist incidental expenses."
The gauge therefore concluded that the $8,770 in cleaning and repair costs were not valid moving expenses as they were incurred "only to maintain the lifestyle that she had in her Montreal condo … these expenses are incidental to the move."
As for the temporary living expenses the taxpayer incurred for lodging and meals, the Revenue enhancement Deed is very strict and states that such expenses are deductible for a maximum of 15 days. The taxpayer was not required past her employer to divide her time between Montreal and Quebec City. Rather, it was her "personal decision to proceed living in her Montreal condo during the period from April to June 2015," and thus the judge concluded that "the (taxpayer) cannot deduct an amount greater than xv days for temporary accommodation and the meals arising from it."
The judge therefore disallowed the taxpayer's temporary living expenses beyond the amounts allowed past the CRA for 15 days and denied the remainder of her moving expenses across what the CRA allowed, calling them "unfounded."
Jamie.Golombek@cibc.com
Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Director, Tax & Estate Planning with CIBC Financial Planning & Communication Group in Toronto.
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Source: https://financialpost.com/personal-finance/taxes/the-ins-and-outs-of-claiming-moving-expenses-on-your-tax-return
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