For most homeowners in Canada, paying for moving services can be an unwanted but necessary expense. Coupled with the stress of relocating yourself or your family from one place to another, the hassle can take out all the joy of settling in a new home.
With the right steps and preparation, it is possible to maximize the efficiency of your move, minimize the expenses, and keep the stress levels from sending you over the edge. Today, we want to answer some critical questions about moving expenses and what’s tax-deductible in a move.
Are Moving Expenses Tax-Deductible in Canada?
Because homeowners are always looking for ways to save, a question that inevitably comes up is whether moving expenses are tax-deductible. If you’re wondering, can I claim moving expenses?, here’s the breakdown.
In short, you can claim moving expenses on your taxes in specific scenarios, if you are moving for school or work. Of course, this rule comes with its caveats and restrictions. The main one is that your new residence has to be at least 40 km closer to your workplace or school than your old one.
Keep in mind that, whether or not you will be eligible for a tax refund on your move, you should always keep all receipts and paperwork for anything you paid or signed. It is important to ensure that there is a clear paper trail and everything is accounted for in the moving budget.
If you are moving for work, it doesn’t necessarily have to be for a new job. You can claim your expenses for relocation purposes as well if you’re staying in the same company.
Another factor to consider when planning on claiming moving expenses is you can only claim income earned at the new location. If you are moving closer toward the end of the year, your move’s cost may exceed the new place’s earnings.
It is possible to carry over your moving expenses in Canada and claim them against the next year’s income. Taking advantage of these resources is an efficient, straightforward way to save on moving costs.
Employers will often offer to reimburse most or part of your moving costs. This is more beneficial than relying on a tax return because the employer will cover the value dollar for dollar, even if it’s not on the move’s full cost. With a tax refund, you will likely get a percentage of the amount on some of the associated expenses, so your tax return is likely to be much lower than your employer’s reimbursement.
If you are self-employed, you can claim moving expenses on your taxes against your personal income, but you cannot claim it under income from stocks or investments.
The main rule that applies for getting a tax refund when moving for school in Canada is that your new place must be established as your primary residence, with the transfer of required documents and change of address to that location. If the new place you’re renting while studying at school and you’ve kept your home address, you will not be able to deduct your moving expenses from your taxes.
When you understand how to claim your moving expenses on a Canadian tax return, you’re putting more money back in your pocket. With these tools, you can reinvest your capital into your home and watch the value grow.
Keep in mind that not ALL moving expenses in Canada are deductible, even if you meet the above eligibility criteria.
Which Moving Expenses are Tax Deductible in Canada?
Households often ask, are moving expenses tax-deductible in Canada? The answer is yes, some of them are. Here is a list of moving expenses that you can claim on your tax return:
- Costs related to transportation: moving, hauling, packing, and replacement value protection or insurance.
- Any storage costs for household goods or vehicles.
- Travel costs for you and your family, including meals, vehicle costs, and accommodation.
- Temporary living costs you may incur, up to 15 days.
- Any costs associated with changing your legal documents.
- Costs of cancelling your old rent or lease agreement.
- Costs for selling your home include advertising, legal fees, and realtor commission.
- Costs for purchasing your new residence: taxes, notary, title transfer costs.
Which Moving Expenses in Canada are not Tax Deductible?
As much as it would be nice to be able to claim everything, some costs associated with moving cannot be claimed on your tax return. These include:
- Any costs associated with making your home more saleable: repairs or cosmetic.
- Any monetary loss from selling your house.
- Any costs you incurred while looking for your new residence.
- Expenses for job hunting in another city.
- Costs associated with bringing your current residence back into its original state.
- Costs to replace personal items damaged or lost in the move or at the old residence.
- Mail forwarding costs.
How to Claim Moving Expenses on Your Tax Return?
On top of filling out Line 219 on your tax return, you should also complete form T1-M, “Moving Expenses Deduction.” You will specify where you moved from and why and specific details and dollar amounts of your move on this form.
Keep in mind when you’re filing Line 219 on your tax return, you’re not required to file the T1-M, nor do you have to file any of the receipts. You are, however, required to have these forms on hand when claiming your moving expenses if CRA does decide to inquire further.
Optional Method for Claiming Moving Expenses on Your Tax Return
If you are not one for keeping track of all your expenses or simply don’t have the receipts or supporting documentation, you can claim some of your moving expenses in Canada under optional rules:
- Meal expenses: Flat rate of 17$ a meal, up to a maximum of 51$ per person per day.
- Vehicle expenses: There is a flat rate to calculate the number of km by the cents-per-km rate. This rate differs based on the province of origin for your move, so be sure to check out moving expenses on the CRA website to find out which rates strictly apply to you.
Even if you have receipts for your move, these optional claim methods may be more beneficial to you. Why not take advantage of every tool at your disposal, so you can save on moving costs. Be sure to calculate both ways of claiming your moving expenses to get the more significant benefit.
What Do Moving Companies Charge: Figuring, Out Residential Moving Costs
Now that you have a better idea of what you can and can’t claim, let’s see what you can expect to spend on moving.
Local Moving Costs
A local mover can cost anywhere between $90-120 an hour in Ontario, depending on the time of the month you are moving in. In other provinces, these rates can range between $60-150. Remember, mover prices can increase as much as 20% at the end/beginning of the new month, so you will be looking at paying in the upper end of that range.
Depending on the number of things you have, your move may also require an additional mover. Additional moving help usually costs between $40-60 per hour, depending on the company. This can cost between $30-60 per hour if you need packing services.
Keep in mind you are also required to pay a one-time truck fee for local moves. Depending on where in Canada you live and what time of the month you are moving, the truck fee can be between $85-120.
Another thing to consider is whether you have many things that require heavy lifting or additional muscle. Things like appliances, gym equipment, or any other specialty items that require heavy lifting can add between $40-90 to the cost of your move each.
Factor stairs into the final price of your move. If the movers have to use the stairs, even the number of steps can add to the total. Plan to spend anywhere between $40-100 additionally, depending on the length of your staircase.
Long Distance Moving Costs
Here are some numbers you should consider when looking for long-distance house movers. Because the final quote depends on the items’ weight, it makes sense that your belongings have to be weighted to price the move accurately.
This can cost anywhere between $50-100 and is where a lot of arguments between homeowners and moving companies begin. Many bad moving companies will intentionally lower the initial quote to get the customer on board. Still, they will crank it up once the stuff is weighed to be heavier than initially.
There is usually a base charge for the first 500lbs of stuff, which can range between $500-700 depending on the moving company. Additional weight can cost anywhere between $400-600 per every 500 lbs., depending on the distance your belongings have to travel. If you require packing assistance, the fee per 1000 lbs. can range between $200-400.
The price for the distance travelled is factored indifferently by moving companies, but most of them will have set rates for moving stuff between specific cities. This can often be a good initial indicator of which companies you want to consider
If your stuff requires storage, most companies can charge up to $400 a month. Some moving companies also offer one-month free storage on long-distance moves. Keep in mind, storage is a huge factor in a long-distance move. Find out how and where your stuff would be stored and whether the company will be unloading it or if it will remain on the truck or in the container once stored.
Select items may also be subject to special pricing during long-distance moves. Appliances can tack on additional $100-120 per item, and piano moving can cost between $300-700 additionally, depending on the type of piano. When it comes to filing your moving expenses with the CRA, you’ll be glad you knew about these savings.
Remember, all deductible moving expenses are subject to 13% Harmonized Sales Tax (HST) in Ontario. Elsewhere in Canada, moving services are subject to a 5% Goods and Services Tax (GST). Be wary of companies that don’t charge HST or offer to scrap it for a cash deal. Having a registered HST or GST number is a sign of a good company and a sure way to avoid scams and fly-by-night movers.
How Can You Save Money on your Upcoming Residential Move
There are many ways you can maximize your move on your own and save money along the way.
The whole point of hiring a company is to save you time and energy. Keep in mind, you can hire a moving company for just a portion of your services, like transportation, and avoid paying for the full amount of the move.
Saving money begins with having the right plan. Getting all the information you need before your move can help you put things in motion and make sure everything is done as efficiently as possible. At the very least, you should consider organizing a timeline for yourself to help you get to the move-in day. This will help you make the most of those deductible moving expenses.
The less stuff you have to move, the cheaper and less time consuming your move will be. Think about what you can resell, donate or give away. Getting rid of unwanted stuff can help you start living in your new place with a fresh perspective.
Minimize packing supplies expenses
Use as much stuff as you can from home. Try not to spend money on boxes, and look in local grocery stores or coffee shops for boxes you can pack your stuff in.
Whether you’ll be transporting the stuff yourself, or have someone else do it for you, make sure you organize all your property as much as possible. Label things appropriately, and make sure boxes with fragile items are marked.
Professional movers vs. friends
If you don’t have many specialty or fragile items, you can benefit from getting some friends to help you move. For the price of some pizza and a case of beer, you can get a group of people together and turn it into a day.
Re-evaluate your home services
An indirect way to save some money when you’re moving is re-evaluating your home services. You can often get a better deal on bundling your internet, cell phone, and cable TV services at your new residence. Check out this useful article from The Globe and Mail about tax and other tips to help you save on your move.
Now you have an idea of what tax-deductible moving expenses are and in what situations you can get some money back. Use that information and our money-saving tips when planning your move, and you can decide exactly how much you want to spend on what services.