# Moving expenses - sale of property



## Dave (Apr 5, 2009)

I moved in 2010 and had to sell my condo. In the new location, I am renting. Can I still deduct the real estate sale expenses or can I do that only if I buy another condo in the new location ?

Thanks !
Dave


----------



## Rico (Jan 27, 2011)

You can only deduct them if you purchase a new property.


----------



## MoneyGal (Apr 24, 2009)

That is incorrect. If you are eligible to claim moving expenses, you don't need to purchase a property in the new location in order to do so. 

Here's the CRA guide to moving expenses: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/219/menu-eng.html

You don't even need to be a homeowner in the first place to deduct moving expenses. You just need to fit the criteria which allow you to deduct moving expenses, and then you can deduct all expenses that apply in your situation.


----------



## Rico (Jan 27, 2011)

Sorry, by "them" I only meant the real estate sale expenses since they're the only ones the OP asked about. I was told directly by a CRA agent that I couldn't deduct mine since I rented in my new location. The rest were all fine.


----------



## MoneyGal (Apr 24, 2009)

That information is incorrect. 

From the CRA bulletin I linked: 

_When your old residence is sold as a result of your move, eligible moving expenses also include:

- legal or notarial fees for the purchase of the new residence, as well as any taxes paid (other than GST/HST or property taxes) for the transfer or registration of title to the new residence, if you or your spouse or common-law partner sold the old residence, and

- 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._

This is totally independent from whether you purchased a house in the new location (and how would CRA know whether you did or not, anyways?) If you filed your return and did not include these expenses, you could file an adjustment to include them now.


----------



## Dave (Apr 5, 2009)

MoneyGal said:


> That information is incorrect.
> 
> From the CRA bulletin I linked:
> 
> ...


This is exactly what confuses me. There is an *AND* in between these two paragraphs. Does that mean that I need to sale AND buy in order to be able to deduct the real estate fees ?

Dave


----------



## MoneyGal (Apr 24, 2009)

No. It means both are deductible. They are bolding the "and" in the bulletin because it is unusual that you get a tax benefit from both ends of a transaction (buying and selling). In the case of moving expenses, you do. 

I'd say phone CRA to confirm, but I'm not sure that's the right advice after reading that someone got incorrect advice from CRA on this point in the past. 

But if you want this information in even more detail from CRA, here's the full interpretation bulletin: http://www.cra-arc.gc.ca/E/pub/tp/it178r3-consolid/it178r3-consolid-e.html

Section 12 of that bulletin provides the complete list of moving expenses, including the two I gave above with NO "and" between them. Hope that makes it even clearer.


----------



## Dave (Apr 5, 2009)

Thanks a lot.

One more question. I had a fixed mortage. I paid the penalty one year in advance (2009 - and moved in 2010) in order to transform it to a variable rate in prevision of the sale. If I had waited to close my fixed rate mortage at the exact time of the sale, I still would have had to pay a penalty. 

So can I deduct the penalty from my moving expenses even if the change was done in anticipation of the sale one year in advance ?

Dave


----------



## MoneyGal (Apr 24, 2009)

I doubt it. I think you'd have a hard time characterizing that as a moving expense given the amount of time that elapsed between the mortgage change and the move. You are allowed to deduct moving expenses, not expenses incurred in anticipation of a move.


----------



## heyjude (May 16, 2009)

Well, this is good news! I am about to make a move. If I hear MoneyGal right, the real estate commission I pay on the sale of my home will be tax deductible. At the same time, I will pay no taxes on the proceeds of the sale of my principal residence. And my employer's subsidy will cover the moving van. Sweet!


----------



## Dave (Apr 5, 2009)

Wow, this forum is so helfpul.

One more issue on which I am debating... I read a previous thread with someone here making several back and forth trips. The CRA told him that he could claim these but an audit was likely becaue he also used the help of movers... I am in a similar situation but it was all a one man job 

- moved from Qc to Montreal (260 km)
- used personal car with 3 back and forth trips & 1 final trip to new home in Mtl
- borrowed a truck in Mtl and drove to Qc for the move and back to Mtl (paid only gas for the rental)

My understanding:

- using the simplified method, I can claim all of the above as travel expenses at line 2
- are gas receipts with dates enough as proof in the case of an audit ? I do not see what else I can provide

- the total expenses for the personal car and truck add up to (260 x 9 = 2340 km x 0.565$/km) = 1322 $ + meals for 4 days for 1 person (51 x 4) = 204$ for a total of ~ 1526 $

- does that sound reasonable as moving expenses ? I do not want to go through the hassle of audit on the basis of exagerated claims. I just have no idea what people usually claim.

Thanks !

Dave ... wishing so hard for a simplifed tax system right now


----------



## MoneyGal (Apr 24, 2009)

I don't have knowledge of the specific question you are asking at my fingertips, but I'm going to give you two other comments which I hope are helpful:

1. you put yourself at risk of a *review,* not a field audit if you claim moving expenses. A review is just a request for verification of the expenses - just like if you e-file and you have a bunch of charitable receipts or tuition expenses, you are at greater risk of needing to have these expenses verified. (This is very simple if you think about it: having expenses which are subject to verification increases the likelihood you will be asked to verify those expenses.) 

I personally would not worry about this outcome - being asked to verify your claim - at all. They won't ask you any more than you've already provided (more or less) in your post. 

2. Even if you are reviewed, what is the total amount at risk? What is the worst possible outcome? If you have done your taxes honestly and fairly, you are at no greater risk of a field audit than anyone else. 

If they disallow or reduce the moving expenses claim, all you have lost is the relatively small deduction you are claiming. 

The worst case scenario is that the deduction is added back into income, and you then owe tax (or your refund is reduced), plus interest (at 3%, IIRC) on the amount of tax owing. 

Hope that is helpful.


----------



## Plugging Along (Jan 3, 2011)

+1... this is the exact advice that our accountant gives me when I start stressing about deductions and the little details


----------



## Dave (Apr 5, 2009)

Thanks !!!

Dave


----------

