The Joys (and Tax Benefits) of Moving
Hello All,
For those of you planning to move, I don't recommend it 😅
I recently moved and while I love my new place, it has been a challenging couple of months.
First, there is the time that it takes (pro tip: it is much longer than you think) to arrange everything, pack and make sure you are ready for the day. Then, there are all the decisions that you have to make. Should you keep those pants that you haven't worn in 5 years? Are you actually ever going to make a fondue? Do you really need all those instruction manuals that you have literally never looked at?
Next comes figuring out where everything is going to be stored in the new place. If you are moving into an older home, closet space is usually at a premium. So you hack storage solutions in an effort to empty a box and hope to figure it out later. (which of course means that you can't really find anything).
For me, perhaps the most challenging part is that my kitchen is still being renovated and until this morning I didn't even have a fridge. So while takeout is fun for a couple of days, one really misses the pleasures of a home cooked meal.
As if this isn't enough, moving is also expensive! The good news, though, is that in some circumstances your moving costs are tax deductible.
If you moved at least 40 km closer to a new job, business, or school, you may be able to claim moving expenses whether you're an employee or self employed.
Moving costs that can be claimed:
There are a number of costs that you can claim that include:
Hiring movers, renting a truck, or storing your belongings.
Travel costs like gas, meals, and hotel stays on the way to your new home.
Up to 15 days of temporary living expenses while waiting to move in.
Fees for canceling a lease.
Real estate commissions and legal fees for selling your old home.
Legal fees and land transfer tax for buying your new home (only if you sold the old one).
Moving costs that can't be claimed:
There are some costs that can't be claimed. These include
home staging,
loss on the sale of your home,
new furniture, or
mail forwarding
Self Employed/Small Business Considerations
As a self employed business owner who works from a home office there are some additional considerations:
If you work from home, AND you move 40 km or more, you qualify for the moving expenses tax deduction.
You might be able to claim specific moving costs (essentially amounts paid to movers) relating to moving your business assets such as your computer, office furniture and client files. It should be noted that CRA does not have specific guidance on this, so you would want to discuss with your accountant before doing so.
If you do plan to claim a pro rata portion of your moving costs, you will want to ensure that you have a reasonable method of calculation e.g. the amount that you paid to the movers multiplied by the proportion of your business assets and files.
Once you move and set up your home office, you will have to recalculate the % of your space that is exclusively used for your home office to calculate the new business use of home deductions. The new calculation will apply from your date of your move.
While moving can be deeply stressful, it can also be helpful to use your new surroundings as a way to create a fresh start, declutter what no longer serves you, and set up systems/habits that make your life a bit easier.
As always, I would love to hear your thoughts. Have you or are you planning to move? What have you found the most challenging? Let me know by simply replying to this email.
Have a great weekend.
Ronika
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