Your mortgage penalty may be tax deductible
There’s one piece of good news about mortgage prepayment penalties: The cost of the penalty can be used as a tax deduction if you are breaking your mortgage to move 40 km or more to be closer to work.
Maximizing their income tax refund is something most Canadians seem to be thinking about this spring. Combining tax time with the expense and stress of moving brings up a whole new set of questions, and it is common not to realize the potential of your refund simply by not being informed. There are constantly changes being made regarding eligible deductions, and being educated is necessary for such an important task. This article from Moneyville contains several examples of possible deductions you may not have considered.
If you are moving to reduce your commute to work by more than 40 km, the fees you incur by breaking the mortgage on your current home can be used as a tax deduction. Revenue Canada will also allow you to deduct moving costs, if you are moving to pursue full-time college or university studies. Costs associated with selling your property when you make this move may also be deductible. Commission fees and legal fees are two examples of this. As always, it is recommended to speak to your tax professional before claiming a deduction you are unsure of.