2025 Guide: Are Moving Expenses Tax Deductible in Canada?

Thinking about moving to a new home in Kelowna, or anywhere else in our stunning Okanagan, is exciting—but it definitely brings up some big financial questions. One of the first things people ask us is, "Can I write off my moving expenses on my taxes?"

For a lot of Canadians, the answer is a resounding yes, as long as your move checks a few specific boxes set out by the Canada Revenue Agency (CRA).

Your Guide to Deducting Moving Expenses

Relocating for a new job, to run your business, or to head back to school can unlock some serious tax savings. The secret is getting a handle on the rules, especially the all-important "40-kilometre rule," which we’ll break down for you. Think of this as your roadmap for turning a potentially stressful move into a financially savvy one.

Whether you’re buying a home in Kelowna or selling your place in Vernon, the costs stack up fast. From paying the movers to covering legal fees, every dollar counts. The good news? The CRA sees these costs as a necessary part of earning an income in a new place.

Why Does the CRA Even Allow Moving Deductions?

The logic behind this tax break is actually pretty straightforward. The government recognizes that your move is an essential step toward contributing to the economy through your work or furthering your education. By letting you deduct eligible expenses, they help soften the financial blow of relocating.

This can lead to a major reduction in your taxable income for the year. For families making a big move to the Okanagan, this could easily free up thousands of dollars.

So, what kind of move usually gets the green light?

• For a New Job: You're starting a new gig at a new location as an employee.

• To Run a Business: You’re moving to operate your business from a new location.

• For Post-Secondary Education: You're a full-time student moving to attend a university, college, or another post-secondary program.

Key Takeaway: The whole point of your move has to be about getting you closer to your new work or school. The CRA needs to see a clear, direct line connecting your relocation to where you earn your income or get your education.

To make it even clearer, let's run through a quick checklist.

Quick Eligibility Checklist for Moving Expense Deductions

Use this table to quickly see if your move might qualify for a tax deduction based on CRA rules.

Eligibility Requirement              What It Means for You               Does Your Move Qualify?

This table should give you a solid idea of where you stand. If you're ticking these boxes, you're on the right track.

The All-Important 40-Kilometre Rule

This rule is the absolute cornerstone of eligibility, so let's make sure it's crystal clear. Your new home has to be at least 40 kilometres closer to your new workplace or school than your old home was.

The CRA calculates this distance using the shortest, most direct public route—basically, the way your GPS would normally tell you to drive.

For example, let's say you lived in Penticton and had a 60-kilometre commute to your job in downtown Kelowna. You decide to move to a new home in West Kelowna that's now only a 10-kilometre drive from that same office. You easily pass the test because your move brought you 50 kilometres closer.

We see this scenario all the time with clients looking to slash their commute and enjoy more of that Okanagan lifestyle. Getting your head around this rule is the first and most critical step to successfully claiming your moving expenses.

Who Qualifies to Claim Moving Expenses

So, you’re making a move in the beautiful Okanagan. You’ve probably got a dozen things on your mind, from finding the right Kelowna home for sale to coordinating the movers. Before you get too deep in the bubble wrap, let’s talk about who can actually turn those moving costs into a valuable tax deduction.

The Canada Revenue Agency (CRA) has pretty clear guidelines, and it’s about more than just changing your address. The rules are there to help people who are relocating for specific, essential reasons—namely, work or school.

There are two main groups who usually get the green light from the CRA to claim their moving expenses. Figuring out which category you fall into is the first step.

Employees and Self-Employed Individuals

This is the most common scenario we see in the Kelowna real estate market. If you’re moving to start a new job, run a business, or transfer to a new location with your current employer, you’re likely eligible.

The key is that your move has to be for work. The CRA sees the move as a necessary cost of earning an income in Canada, so they let you deduct it.

Here are a couple of real-world Okanagan examples:

• A New Job in the Wine Industry: Say you've just landed a fantastic role at a winery in West Kelowna. You're currently living in Vancouver, so you sell your condo and buy a new home to be closer to work. Your move is directly tied to your new job, making you a strong candidate for the deduction.

• A Business Relocation to Vernon: You run a successful tech startup from your home office in Calgary. Seeing the growth in the Okanagan, you decide to move your business and your family to Vernon. Because your move enables you to operate your business from a new location, your expenses can likely be claimed.

Post-Secondary Students

The second group that qualifies is full-time students. If you’re moving to attend a university, college, or another post-secondary school, you can deduct your moving expenses.

This is a huge help for students, especially those moving to the Okanagan for the first time. For instance, a student from Prince George moving to Penticton to attend Okanagan College can claim eligible moving costs.

There's one important detail for students: you can only deduct moving expenses from income you earn. This usually means claiming it against scholarships, fellowships, or grants that are counted as income. If you don't have enough of that type of income in the year you move, you might be able to claim it against income from a job in your new location.

Key Insight: Whether you're an employee or a student, the fundamental rule is the same. Your move must be directly connected to earning an income or pursuing your education. A move just for a lifestyle change, without a new job or school to go to, won’t qualify.

The 40-Kilometre Rule Explained

Now for the most important part of qualifying: the 40-kilometre rule. This is the ultimate test from the CRA, and it’s non-negotiable.

Here’s the rule in plain English: Your new home must be at least 40 kilometres closer to your new work or school than your old home was.

Think of it like upgrading your commute. Let’s say you were living in Salmon Arm and commuting 70 kilometres to your job in Kelowna. You find a great property with Vantage West Realty and move to Lake Country, and now your commute is just 20 kilometres.

• Old Commute: 70 km

• New Commute: 20 km

• Difference: 50 km

Since your move brought you 50 kilometres closer to work, you’ve easily passed the 40-kilometre test. The CRA calculates this using the shortest, most common public route—the same way your map app would direct you. It's a straightforward calculation that determines if your move is considered "necessary" for work or school in the eyes of the CRA.

What Moving Costs You Can Actually Deduct

So, you’ve cleared the 40-kilometre hurdle and confirmed you're eligible to claim moving expenses. That's fantastic news! The next big question is, what can you actually write off? Getting this part right is how you truly maximize your tax return.

The Canada Revenue Agency (CRA) has a detailed list of what they consider an eligible moving expense. Let’s break it down into easy-to-understand categories, so you know exactly what receipts to hang on to.

Transportation and Storage Costs

This is often the biggest chunk of any moving budget, and thankfully, it’s mostly deductible. This category covers the costs of physically getting your belongings from your old home in, say, Vernon, to your new place in Kelowna.

You can claim expenses for things like:

• Hiring Professional Movers: The fee you pay a moving company to pack, load, transport, and unload your household items is a primary deduction.

• Renting a Truck: If you’re going the DIY route, you can absolutely deduct the rental fees for a truck or trailer.

• Packing Materials: Don't forget the small stuff! The cost of boxes, tape, bubble wrap, and other essential packing supplies is covered.

• In-Transit Storage: Sometimes your move-in and move-out dates don't line up perfectly. You can deduct the cost of storing your belongings for up to 30 days while you're between homes.

Travel Expenses for You and Your Family

The CRA understands that you and your family don’t just magically appear at your new home. The costs to get everyone there are also deductible.

This includes:

• Vehicle Expenses: You can claim the cost of fuel, oil, and maintenance for your personal vehicle during the move. Alternatively, the CRA offers a simplified method, which lets you claim a flat rate per kilometre travelled.

• Accommodation: If your move from Calgary to Penticton takes a couple of days, you can deduct the cost of reasonable accommodation for one night along the way.

• Meals: You can also claim meal costs during your travel period. Just like with vehicle expenses, the CRA has a simplified flat-rate method for meals, which saves you from keeping every single food receipt.

A Quick Tip from the Pros: Many of our clients find the CRA's simplified flat-rate methods for vehicle and meal expenses much easier. It cuts down on the paperwork and makes calculating your claim a breeze. You just need to keep a log of your travel dates and distance.

Costs Tied to Your Old and New Homes

This is where people often miss out on significant deductions because they don't realize how many real estate-related costs are eligible. Selling your old home and buying a new one in the Okanagan comes with a lot of expenses that can be included in your claim.

Here’s what you can deduct:

• Real Estate Commissions: The commission you paid your real estate agent to sell your old home is fully deductible.

• Legal Fees and Land Transfer Taxes: These are major expenses when buying a new home. You can claim the legal fees and any land transfer taxes you paid.

• Advertising Costs: Any money you spent on advertising to sell your old home can be included.

• Lease Cancellation Fees: If you had to break a lease on your old rental, you can deduct the penalty you paid to your landlord.

These costs can add up to a substantial amount, especially in the Okanagan real estate market. For a deeper dive into the financial side of things, our guide on what it really costs to own a home in Canada can offer some valuable insights.

Deductible vs. Non-Deductible Moving Expenses

To make it even clearer, here’s a quick list of what you can and can’t claim. Getting this wrong could trigger a review from the CRA, so it’s important to know the difference.

Expense   Deductible (What You Can Claim)   Non-Deductible (What You Can't Claim)

Keeping these distinctions straight will help you file an accurate and effective claim, ensuring you get back every dollar you’re entitled to without raising any red flags with the CRA.

How to Calculate and Claim Your Deductions

Alright, you know which moving costs are on the table for a tax deduction. Now for the fun part: turning all those receipts and invoices into actual tax savings. Let's walk through how to calculate and claim your deductions—it's more straightforward than it sounds.

Think of it as a three-step process: gather your costs, fill out the form, and file it away. This simple visual breaks it down nicely.

From organizing your paperwork during the chaos of the move to finally claiming it with the CRA, each stage is a key part of the puzzle.

Tallying Up Your Eligible Expenses

Your first task is to add up every single eligible moving cost. This is where that organized folder you kept—whether it’s a physical file or a digital one—becomes your best friend. Sift through all your receipts, invoices, and bank statements.

I find it helps to create a simple list with two columns: the expense category (e.g., "Movers," "Legal Fees") and the amount. Add it all up to get your grand total of deductible moving expenses.

Don't forget about the simplified methods for meals and vehicle expenses. Instead of hoarding every single gas receipt, you can claim a flat rate per kilometre. The CRA updates these rates periodically, so always check their site for the current amounts. Trust me, it’s a huge time-saver.

Understanding the Income Limitation Rule

This next part is really important. You can only deduct moving expenses up to the amount of income you earn at your new job in the tax year you moved.

Let's break that down with an example. Say you moved to Kelowna in October for a great new job. Your moving expenses came to $8,000. But between October and December, you only earned $6,000 at that new gig. For that tax year, you can only deduct $6,000.

Don't panic—the remaining $2,000 isn't lost. The Canada Revenue Agency lets you carry that unused amount forward. You can claim it against the income you earn at that same job in the years to come.

Expert Tip: If you're moving late in the year, this rule will almost certainly come into play. Keeping good records of your carry-forward amount is the key to getting your full deduction over time.

Filling Out Form T1-M

The official paperwork you'll need is Form T1-M, Moving Expenses Deduction. This is where you lay out all your costs and calculate your final claim.

The form itself is pretty logical:

1. Lines 1-5: You'll start by calculating the total for your transportation, travel, and meals.

2. Lines 6-11: Next, you add in the costs tied to your old and new homes, like real estate commissions and legal fees.

3. Line 13: This is where you plug in the total income you earned at the new job location for that specific year.

4. The Final Calculation: The form then walks you through comparing your total expenses to your eligible income to figure out what you can deduct this year.

You absolutely have to attach a completed Form T1-M to your tax return to make the claim. For a broader look at your tax obligations in the province, our guide to navigating BC real estate tax is a great local resource.

The Golden Rule of Documentation

If there’s one thing you take away from all this, let it be this: keep every single receipt. Seriously, we can't stress this enough. The CRA has the right to ask for your supporting documents for up to six years after you file.

Without proof, your claim could be denied. That would mean paying back any refund you received, and you might even get hit with interest charges.

Your documentation should include:

• Receipts for all claimed expenses (movers, storage, packing tape—you name it).

• Signed statements from your real estate lawyer detailing fees and taxes paid.

• A travel log with dates and kilometres driven if you use the simplified vehicle expense method.

• Copies of your old and new employment contracts or official letters of offer.

A little bit of organization during your move to the Okanagan will save you from a massive headache down the road and give you total confidence when you file.

Special Considerations for Okanagan Movers

Relocating to the Okanagan comes with its own unique set of circumstances, and your tax deductions are no different. It’s one thing to know the general rules, but applying them to real-world situations here in Kelowna, Penticton, or Vernon is what really matters.

Let's look at a few common scenarios we see every day.

Handling Employer Reimbursements

It’s fantastic when a new employer helps with your relocation costs. Many companies in the Okanagan’s booming tech and healthcare sectors offer moving allowances to attract top talent. This is a huge plus, but it does make your tax claim a little more complex.

Here’s the deal: you can only deduct the moving expenses your employer did not cover.

For example, if your total moving bill was $7,000 and your new job in Kelowna gave you a $5,000 moving allowance, you can only claim the remaining $2,000 on your tax return. Simple as that.

Keep in mind that any reimbursement you get from your employer is considered taxable income. It's critical to subtract this amount from your total expenses before you fill out Form T1-M.

Important Note: You can't double-dip. Claiming expenses that have already been paid for by your employer is a major red flag for the Canada Revenue Agency. Be honest and accurate with your numbers.

Moves for Self-Employed Individuals

The Okanagan is a hotspot for entrepreneurs. We often work with self-employed people moving their businesses to tap into the vibrant Kelowna community. For you, the rules are largely the same, but with a couple of key differences.

Your deduction is still limited to the income you earn at your new business location.

For instance, if you move your consulting business from Vancouver to West Kelowna, you can deduct your moving costs against the income that business generates after the move. Documenting your business income from the new location is absolutely essential. This is a common situation for many people, and our comprehensive guide on moving to Kelowna, BC provides additional context for those planning a relocation.

Navigating Late-in-the-Year Moves

What happens if you move in November or December? This is a frequent question, as job offers and home sales don’t always line up perfectly with the calendar year.

If you move late in the year, you might have significant moving expenses but only a small amount of income from your new job to claim them against. Let’s say your move to Penticton cost $10,000, but you only earned $4,000 at your new job before the year ticked over.

In this case, you can deduct $4,000 in the current tax year. The remaining $6,000 isn't lost—thankfully! You can carry that amount forward and deduct it from the income you earn at the same job in the following years.

This carry-forward provision is a lifesaver for those making a move late in the year, ensuring you eventually get the full benefit of your deduction.

Your Moving Expense Questions Answered

Moving is a massive undertaking. When you're also navigating the Kelowna real estate market, it's completely normal for tax questions to pop up. We hear them all the time from clients buying or selling homes across the Okanagan.

To give you some clarity and confidence, we’ve put together the most common questions we get about deducting moving expenses. Here are the straightforward, no-fluff answers you’re looking for.

Can I Claim Moving Expenses If I Move Within the Same City?

This is a really popular question, especially for people looking to upgrade their home without leaving the city they love. The short answer is, probably not.

It all comes down to the 40-kilometre rule. To qualify, your new home must be at least 40 kilometres closer to your new workplace or school than your old home was.

So, if you’re just moving from Kelowna’s Glenmore neighbourhood to a beautiful new home in the Upper Mission, but your job downtown stays the same, your commute hasn't shortened by the required amount. The deduction is designed to help with the major cost of relocating for work or school, not just for changing your address in the same general area.

What if My Moving Costs Are More Than My New Job Income This Year?

This happens more often than you'd think, especially for our clients who move to the Okanagan late in the calendar year. You might have a big moving bill in November but only a month or two of paycheques from your new job.

The Canada Revenue Agency (CRA) has a rule for this exact situation. You can only deduct moving expenses up to the amount of income you earned at your new job in the year of the move.

But don't worry—you don't lose out on the rest of the deduction. The good news is you can carry forward any unused expenses. You can then apply them against the income you earn at that same job in the following years, making sure you eventually get the full tax benefit you're entitled to.

Do I Really Need to Keep All My Receipts?

Yes. One hundred percent. If you take away only one piece of advice from this guide, let it be this: keep every single receipt. This is the absolute most important step in protecting your claim.

The CRA requires you to hold on to all your supporting documents for six years after you file your tax return. This includes everything from invoices and signed statements from your lawyer to every little receipt related to the move.

“Think of your receipts as your insurance policy. If the CRA decides to review your claim, having a complete and organized record is the difference between a smooth process and a major headache. Your documentation is your proof.”

• AJ Hazzi, Founder of Vantage West Realty

Without proof, your claim could be denied, and you might have to pay back your refund with interest. We always tell our clients to create a dedicated folder—either a physical one or a digital one on their computer—for every single expense. A little organization upfront saves a world of trouble later.

How Do I Claim Meal Costs While Travelling to My New Home?

When you’re making the trek to your new Okanagan home, you can definitely claim meal expenses for your family. The CRA actually makes this pretty easy with what they call the "simplified method."

Instead of collecting every last receipt for coffee and snacks on the road, you can claim a flat rate per person, per day. The rate is set by the CRA and is quite reasonable, making it much simpler than trying to track every little purchase.

To use the simplified method, you just need to keep a record of the number of days you were travelling for the move.

If you prefer, you can also use the "detailed method." This means you claim the actual amount you spent on meals. If you choose this route, you must keep every single food receipt to back up your claim.

What if My Employer Paid for Part of My Move?

Many companies offer relocation packages to attract talent, which is a fantastic perk when you're moving for a job in a growing area like Kelowna. If your employer reimburses you for some or all of your moving costs, it just changes how you calculate your deduction.

It's simple: you can only claim the eligible moving expenses that you paid for out of your own pocket.

Here’s a quick example:

• Your total eligible moving expenses are $9,000.

• Your employer gives you a $6,000 moving allowance.

• The amount you can claim on your tax return is $3,000 ($9,000 - $6,000).

It’s also important to know that any reimbursement you receive from your employer is typically considered taxable income and will show up on your T4 slip. The main takeaway is that you can’t deduct an expense that someone else already paid for.

Navigating the financial side of a move can feel complicated, but you don't have to do it alone. If you’re thinking about buying or selling in Kelowna or the surrounding Okanagan area, the team at Vantage West Realty is here to help you make your next move with confidence. Reach out today to get started.