Claiming Moving Expenses Income Tax Canada
Let the Canadian taxman pay your moving expenses
How can you do that?
As a full-time Canadian real estate investor, you should be very aware of the tax exemptions that are available, helping to save you time and money! Generally, for these exemptions to be viable, your move must be from one place in Canada to another place within Canada.
You can also deduct moving expenses if you move to study courses as a full-time student at a College, University, or other institution.
Your new home must be at least 40km (by the shortest public route) closer to the new place of work. You must establish your new home as the place where you ordinarily reside.
You can deduct reasonable amounts that you paid for moving yourself, your family, and your household effects.
What are the Eligible Moving Expenses?
Some of the expenses include:
1. Transportation and storage costs for household effects, including items such as boats and trailers
2. Traveling expenses, including vehicle expenses, meals, and accommodations to move you and members of your household to your new residence
3. Costs for up to 15 days for meals and temporary accommodation near either residence for you and the members of your household
4. The cost of cancelling a lease for your old residence
When your old residence is sold as a result of your move, expenses also include:
1. Legal or notaries fees for the purchase of the new residence, as well as any taxes paid (other than GST or HST or property taxes)
2. The cost of selling your old residence, including advertising, notarial or legal fees, real estate commission, and mortgage penalty when the mortgage is paid off before maturity
Do You Need to Have All of the Receipts?
As a full-time Canadian real estate investor, we recognize the importance of gathering and keeping all documentation as part of our due diligence. The same idea can be used to deduct from your taxes. There are two methods that can be used:
1. Yes, be sure to keep the receipts and documents supporting your claim!
2. No. Instead of claiming your actual expenses (the detailed method), you can choose the simplified method of claiming vehicle and meal expenses. Although you do not have to submit detailed receipts for actual expenses if you choose the simplified method, the Canadian Revenue Agency may still ask you to provide some documentation to establish the duration of temporary lodging.
Can I claim incidental costs related to the move?
You can claim the costs of:
1. Changing your address on legal documents
2. Replacing driving licenses and non-commercial vehicle permits (not including insurance)
3. Utility hook-ups and disconnections
How about my old house?
What about costs to maintain my old residence when vacant? You can claim, to a maximum of $5,000, the cost for interest, property taxes, insurance premiums, and heat and utilities expenses that you paid while the property was vacant, and during the time that efforts were made to sell the home. You cannot deduct these costs during a period when the old residence was rented.
Can I pay an Adult Child?
If you hire your child who is 18 or older to help in the move, then you will be entitled to a tax deduction provided that the costs qualify as eligible moving expenses. Your child will have to report that income, but if he has little or no other income (under $10,320 in 2003), then he wont pay any tax on the amount. It is a great income-splitting tactic, and a great way to save tax as a family.
Can I claim on either return?
A recent technical interpretation issued by the Canada Revenue Agency in 2009 dealt with a situation where both spouses in a family are eligible to claim moving expenses in the same move. It would make sense for the spouse with the higher marginal tax rate to make the claim (assuming that spouse has sufficient post-move income in the year of the move to claim all the expenses). More tax will be saved this way.
So use your skills as a full-time real estate investor, and find out how many different ways you can save taxes and money for yourself and your family!
World Wealth Builders offers many unique, practical, out of the box real estate investor apprenticeships which offers the student hands on, in the trenches style instruction to facilitate both a different mindset as well as a successful and lucrative real estate investment business. To find out more, please go to www.WorldWealthBuilders.com/live
The above information is provided as a guideline and is not intended to give a professional legal advice. Please consult a real estate lawyer for their opinion on your particular case.
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