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How much can I deduct for moving expenses?

Gena Katz, a chartered accountant and principal with Ernst and Young, has the answer.

Gena Katz 20 May, 2004 | 1:00PM
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Dear Expert:

What is the limit on moving expenses and the percentage of that limit I can deduct?

Expert answer:

The limitations in relation to the deductibility of moving expenses do not depend on a specific dollar or percentage amount. Nevertheless, the rules are quite specific. If you move as a result of a job or business relocation, to start a new job or business or to attend university or college, you can deduct certain reasonable moving expenses.

To take advantage of these provisions, in the case of employees and self-employed individuals, the move must be within Canada and in the case of a student, either the old or new residence must be in Canada. In all cases, the new residence must be at least 40 kilometres closer (by the shortest normal route open to the public) to the new place of work or school.

The list of eligible moving expenses includes the following:
  • Travel costs (including a reasonable amount expended for meals and lodging) incurred during the course of moving the taxpayer and members of the taxpayer's household from the old residence to the new residence;
  • Storage and transportation of household effects;
  • The cost of up to 15 days of temporary lodging and meals near the old or new residence;
  • Lease cancellation payments relating to an unexpired lease on the former residence;
  • Selling costs relating to sale of the old home (including real estate commissions, advertising and legal fees and mortgage discharge penalties, but not any capital loss incurred on the sale);
  • Where the former residence is sold by the taxpayer or the taxpayer's spouse, legal expenses and any taxes (but not GST) relating to purchase of the new home;
  • Up to $5,000 of the cost of maintaining the vacant former home, including interest, property taxes, insurance, heating and utilities, while reasonable efforts are made to sell the home;
  • Other sundry fees such as the costs of revising legal documents to reflect the new address, replacing drivers' licences and ownership permits and fees associated with the disconnection and reconnection of utilities.

The amount of eligible moving expenses that may be deducted in a year is limited to the amount of employment or business income from the new work or business location and in the case of a student, to scholarships, fellowships, bursaries or research grants received in the new location.

There will be situations where the eligible moving expenses will exceed the income from the new location, in particular, where an eligible move takes place near the end of a calendar year. Where an individual cannot deduct eligible moving expenses because of the income limitation, the undeducted expenses will be deductible in the following year, but again only to the extent of eligible income from the new location.

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Gena Katz

Gena Katz  

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