With house prices soaring, historically low mortgage rates, and the pandemic allowing many people to work from home, there are undoubtedly many reasons why Canadians are looking to sell and relocate right now. These include wanting to be closer to family and friends and wanting to be further away from the workplace. More than 10,000 Canadians will move this spring for a variety of reasons. No matter why you’re moving or how far you’re going, there are two things you can count on: stress and expense. Relocation always involves disruption of one’s life and hefty expenditures, even if the change is intended. The focus of relocating cannot be alleviated in any way, but a tax credit may somewhat mitigate the related expenditures for many of those expenses.
If you’re moving to Canada for a new job, you may be able to deduct part of your moving expenditures. Life changes, stress, and financial costs are all associated with relocating. However, is it possible to remove the costs of shifting to a new job? If you’re a Canadian resident who has to move because of a new job or a change in work location, or for business reasons, you may be able to deduct your moving expenditures. This tax deduction is only available if you relocate within 40 kilometers of your new place of work or company to be qualified. Depending on the circumstances, this might imply moving to a different province or state altogether.
Furthermore, you don’t have to be a homeowner to deduct your moving costs. Homeowners and tenants who move within 40 kilometers of each other may deduct the same moving-related expenditures. In addition, students who relocate to seek summer employment may claim relocation costs if their move exceeds 40 kilometers in total distance.
Keep in mind that even if the 40-kilometer criterion is reached, moving expenses are deductible only from job or self-employment (company) income – no deductions are allowed from other sources of income, such as interest or unemployment insurance payments.
For the most part, relocation costs for the taxpayer, family members, and home items are deductible. Moving costs must always be subtracted from the future job or self-employment income. Suppose you relocate later in the year and your moving expenditures are substantial. In that case, your income in the new location may be less than your deductible moving expenses for the year of the relocation. Costs incurred when moving to a new place might be carried over and deducted from future income.
Line 21900 – The CRA must complete moving expenses for your expenses. Please be aware that this ling has a previous designation of 219 before 2019. It’s also necessary to meet Form T1-M, Moving Expenses Deduction. Even though you aren’t needed to maintain meticulous records of all your costs and receipts when making these claims, the Canada Revenue Agency (CRA) may nevertheless ask for proof of your expenditures. It’s to your best advantage to maintain these documents on hand at all times, no matter what.