Moving Houses in 2026? Don’t Leave Your Tax Deductions in a Box

Relocating for a new job or school is a massive juggle. The good news? The CRA offers a "moving expenses deduction" that can turn those heavy lifting costs into a lighter tax bill. Here is the streamlined guide to what counts when you file in 2026.

1. Do You Qualify? The "40km Rule"

To claim moving expenses on your 2025 return, you must meet two simple criteria:

• The Reason: You moved to start a new job, run a business, or attend post-secondary school full-time.

• The Distance: Your new home must be at least 40 kilometres closer to your new work or school than your old home was. (Tip: Use the shortest public route on Google Maps to verify this).

2. What You CAN Deduct

You can choose the Detailed Method (keep every receipt) or the Simplified Method (flat rates for meals and vehicle use).

• Packing & Transport: Professional movers, truck rentals, tape, and boxes.

• Storage: Up to 3 months of storage fees if you can’t move in immediately.

• Travel Costs: Fuel, lodging, and meals for your household while en route.

• Temporary Living: Up to 15 days of meals and hotels near either home while waiting to move in.

• Selling Your Old Home: Real estate commissions, legal fees, and mortgage penalties.

• Maintaining a Vacant Home: Up to $5,000 for interest, taxes, and utilities while your old home was empty and for sale.

• Lease Cancellation: Any fees paid to break your old rental agreement.

3. What You CAN’T Deduct

The CRA is strict about "personal" vs. "moving" costs. You cannot claim:

• Pre-Move Trips: No house-hunting or job-hunting travel.

• Home Fix-ups: No staging, repairs, or cleaning services.

• Reimbursed Costs: If your boss paid for the move, you can’t claim it again.

• Furniture: No new sofas or "refusal fees" for moving pianos.

• Mail Forwarding: Strangely, Canada Post fees are not eligible.

4. The "December 31" Rule

In Canada, you don't split your taxes between two provinces. You pay the tax rate of the province where you lived on December 31, 2025.

• The Surprise: If you move from a low-tax province (like Alberta) to a higher-tax one (like Manitoba) in December, you’ll pay the higher rate for the entire year.

• The Quebec Factor: If you’re in Quebec on Dec 31, remember you must file two separate returns (CRA and Revenu Québec).

Example: If you lived in Ontario from January to November but moved to Alberta on December 1, you are considered an Alberta resident for the entire year. You will pay Alberta’s tax rates on every dollar you earned in 2025, regardless of where you made it.

What Stays the Same: Moving provinces is "tax-neutral" for your big accounts. Your RRSP and TFSA limits remain federal, your Canada Child Benefit continues (though the provincial portion may adjust), and moving house doesn't trigger any taxes on your stocks or investments.

5. How to Claim Your Moving Expenses: The 2026 Checklist

To get your deduction, you must complete Form T1-M (Moving Expenses Deduction). This worksheet calculates your total, which you then enter on Line 21900 of your tax return.

Your Filing Checklist:

• Form T1-M: The primary math sheet for your move.

• Receipts & Invoices: Proof for movers, truck rentals, and storage (keep these for 6 years).

• The Paper Trail: Utility bills or a lease showing your new address and start date at work or school.

• Employer Verification: A record showing your boss didn't already pay you back for these costs.

• Travel Logs: If using the Simplified Method, keep a log of your dates and total kilometres driven.

6. Important: Matching Your Income

You can only deduct moving costs against the money you earned at the new location.

• Employees/Self-Employed: Your deduction cannot exceed the total income earned at your new workplace in 2025.

• Students: You can only deduct costs against the taxable portion of your scholarships or grants.

• The Carry-Forward: If your move cost more than you earned at the new job this year, don't sweat it. You can carry forward the leftover balance and claim it against next year’s income at that same location.

7. How to File

Report your expenses on Form T1-M. If your moving costs are higher than the income you earned at your new job this year, don't worry—you can carry forward the extra amount to deduct against that same job's income next year.

For help with filing, you can contact us or file online right now by yourself.