Is it time to pack up the family and the critters and head off on a new adventure?
One of our Partners, Drew Jackiw, made a big move 14 years ago, moving to Medicine Hat to start his career in Accounting. He didn’t anticipate staying in Medicine Hat for as long as he has, but once he arrived at JMH it was hard to move on. We have partners in our Brooks and Calgary offices that have experienced the same thing.
It’s exciting but also daunting to make a move to a new city so Drew decided to help you by providing some helpful tax advice in regards to deductible moving expenses. Here are his top relocating tax tips:
- Real Estate Fees and Legal Expenses
When most people think of moving expenses, they believe the bill from the moving company (or UHaul if you did it yourself), but often your most significant costs are the real estate and legal fees to sell your previous home which is deductible against your earnings from your income from your new place of employment. Pro Tip: You can also deduct some legal/transfer fees related to purchasing your new home or penalties for getting out of a lease.
- Trouble Selling Your Old Home?
If you are still stuck holding onto your old home, you can deduct up to $5,000 of mortgage interest, utilities, property taxes and insurance as moving expenses, provided you are actively marketing your home.
- Lost Your Receipts?
When you’re going through a move, the last thing on your mind is keeping your meal and fuel receipts. Good news! CRA has a simplified method that allows you to claim $17 per meal ($51/day) for a maximum of 15 days. Additionally, if you lost your gas receipts, you can claim mileage at a rate of $0.55/km for 2018 tax returns. NOTE: CRA adjusted the mileage rate to $0.58/km for 2019 returns.
- Sale of Previous Principal Residence
In October 2016 the CRA changed the rules on the sale of your principal residence. Previous to 2016 when you sold your home, and you were claiming the principal residence exemption nothing was reported on your personal tax return. In 2016 and later tax years you must report the sale of your residence on Schedule 3 and complete form T2091 to designate that property as your principal residence for the years that you owned it. The late filing penalty for this form is $100 per month, up to a maximum of $8,000 so make sure you comply.
These are just a few tips on filing your personal tax return with moving expenses. If you have specific circumstances and are looking for advice, please book a free initial consult with Drew or one of our other team members at JMH.