Is Office Relocation Tax Deductible?

As businesses grow, they often need more space, and relocating to a larger office can provide the resources needed to keep thriving. The good news? Some office relocation expenses are tax deductible, offering a meaningful financial advantage when planned correctly.

According to guidance from the Internal Revenue Service (IRS), businesses may deduct ordinary and necessary expenses related to relocating operations, while costs that improve or enhance long-term assets must be capitalized and depreciated over time. Understanding this distinction is key to maximizing deductions while staying compliant.

This guide explains which office moving expenses are deductible, which are not, and how businesses can document relocation costs properly.

Who This Guide Is For

This guide is designed for business owners, startups, office managers, CFOs, and self-employed professionals planning a commercial relocation who want to understand which moving expenses may qualify as tax deductions under current U.S. tax law.

Who Can Deduct Office Moving Expenses

Businesses that qualify for tax deductions include small businesses, corporations, and LLCs. In addition, businesses expanding to a new office location can claim deductions as necessary operating expenses. Self-employed professionals and startups relocating offices likewise benefit from tax deductions.

Sole proprietorships and partnerships are eligible to deduct moving fees upon meeting two IRS criteria: the distance requirement stipulates that a new business must move to a location at least 50 miles farther from the home than the current company location.

The second criterion involves time spent working at the new location: the self-employed person in the sole proprietorship or partnership must work full-time at the new location for at least 39 weeks during the first year and at least 78 weeks within two years.

Personal employee moving expenses are not deductible for individuals per the Tax Cuts and Jobs Act, effective as of January 1, 2018. Despite this change to federal law, the Act continues to allow companies to deduct moving costs as business expenses.

Which Office Relocation Costs Are Tax Deductible?

Only direct costs tied to physically moving the business qualify as deductible. These expenses must be ordinary, necessary, and directly related to relocating operations.

Common deductible office moving expenses include:

• Professional office movers: Fees paid to licensed commercial moving companies
• Packing and unpacking services: Labor and materials used to protect office items
• Transportation of office furniture and equipment: Desks, chairs, filing cabinets, machinery
• Short-term storage related to the move: Temporary storage required during relocation
• Disconnecting and reconnecting equipment: Safe handling of office machinery and electronics
• IT infrastructure and server relocation: Specialized services for transporting sensitive technology

For businesses with complex networks or sensitive systems, learning how to plan an IT office move without costly downtime can help protect operations, reduce risk, and avoid expensive interruptions during relocation.

Which Office Moving Costs Are NOT Deductible?

Non-deductible moving costs include losses from damaged equipment and long-term storage unrelated to the move. The deduction of lease term penalties depends on the factors surrounding the termination; if the office is purchased, the fee is not deducted immediately but added to the base of the purchase price.

Beyond non-deductible expenses, businesses often face hidden costs of moving your business that are not immediately obvious but can significantly impact budgets if not planned for.

Common non-deductible moving expenses include:

• Losses from damaged equipment: Repairs or replacements due to accidents during the move.
• Lease termination penalties: Early lease break fees are usually considered capital expenses, not deductible.
• Improvements to the new space: Renovations, upgrades, or remodeling costs are treated as capital investments.
• New furniture purchases: Instead of deducting, new office furniture is depreciated over time.
• Long-term storage unrelated to the move: Storage costs not directly tied to relocating your office aren’t deductible.

Understanding these limits helps you avoid costly mistakes and ensures your business stays compliant with tax rules. Keeping accurate records and consulting a tax professional can maximize legitimate deductions while protecting your company from audits.

Business Expense vs. Capital Expense

Home Office vs. Commercial Office Moves

The self-employed who move a business from a home office can deduct the necessary costs of the relocation. Only the business portion, like transporting office furniture, is deductible; personal expenses for moving household goods are not tax deductible under current tax law.

Home office deductions follow different IRS criteria, which include the exclusive use of the home office for business purposes. A guest bedroom that doubles as a part-time office fails to qualify as tax-deductible. Among other criteria, a home office must be regularly and continuously used for business purposes only.

Moving a business from a home office and moving between commercial locations follow the same principles: moving-related business expenses are deductible while personal ones are not. Expanding from a home to a leased office space allows a 100% deduction on rent, utilities, and operating expenses.

IRS Rules & Documentation

Record-keeping is essential when claiming deductions for business moving expenses. Keep invoices from the commercial mover to serve as proof of costs; obtain an itemized invoice for more robust documentation. Separate moving costs from office renovations costs at the new space.

Use a dedicated business account for all financial transactions to simplify income and expense tracking for future tax preparation. Although managing records can be handled in-house, working with a CPA offers classification. Tax professionals are knowledgeable about continuously evolving tax laws.

Only a licensed tax expert can provide the tax advice companies need to navigate the complex landscape of business tax deductions associated with relocating. The aforementioned serves as general education and guidance but does not replace the professional tax advice of a financial specialist.

Office Relocation with Chicago Office Movers

If your business is preparing to relocate, Chicago Office Movers offers comprehensive commercial moving solutions designed for businesses of all sizes.

Our licensed and background-checked crews specialize in:

• Office furniture and cubicle relocation
• IT systems, servers, and sensitive equipment
• Lab equipment and specialized commercial assets

Office goods are transported in climate-controlled, air-ride suspension trucks to ensure maximum protection. Customers receive real-time tracking, short- and long-term storage options, secure paperwork storage, professional packing materials, and insurance coverage.

Whether your move is local, long-distance, or international, our team plans and executes each relocation with precision and care.

When a business move is on the horizon, choose Chicago Office Movers for dependable service and extensive industry experience. Serving Chicagoland with dedication. Contact our Elk Grove Village or Chicago office for a free estimate.