WASHINGTON — While the Congress gets into the nitty-gritty of tax reform legislation--including real estate ramifications, Americans on the move, literally, can thank their Uncle Sam for tax breaks involving relocation.
Marketing executive Rebecca Cox of Long & Foster Realtors in this area, pointed out recently that moving can hardly ever be described as fun "but it can be less taxing than you might imagine, thanks to numerous deductions that may be claimed if your residential move is job related."
The key is that the move be job related. When it is, these are legitimate deductions:
1--Cost of moving household goods and personal effects. That includes the costs of packing, crating and transporting furniture and belongings--plus in-transit storage of up to 30 days.
2--Traveling costs for household members. That means cost of personal transportation, meals and lodging in transit. Also food and lodging for the day before the move and the day of arrival. The mileage allowance for driving to a new home is 9 cents a mile, and parking fees and tolls may be claimed in addition.
3--Cost of selling and buying a house. These include real estate commissions, attorney fees, escrow fees, appraisals and similar charges. These are deductible from the actual gain on the sale of the house, as are fix-up expenses. However, a loss on the sale of a house cannot be deducted.
Cox pointed out that not all moves to a new job quality for tax deduction. The Internal Revenue Service demands, for instance, that indirect costs of house hunting cannot exceed $3,000, but the limit is $6,000 if both spouses are going to new jobs in separate cities. Of the $3,000, only $1,500 can be for house hunting and temporary quarters.
There's a distance test too. The distance between old and new job sites must be at least 35 miles more than the distance between the old job and the new residence. In other words, the new commuting distance must be more than 35 miles beyond the former commute.
Also, you must work full time at the new job site for at least 39 weeks of the 12 months after the move. If you are self-employed, you can deduct moving expenses if you work in the new location for at least 78 weeks during the next 24 months, including 39 weeks of the first 12 months.
Finally, Cox urges all persons making job-related housing moves to keep a diary of expenses concerning the move--mileage, taxis, tips, meals and hotel receipts. That's the proof you need for IRS, she concluded.