BC to New York: Two High-Tax Jurisdictions and What Each Does With Your RRSP

Vancouver to New York is a lateral move on income tax. BC's combined top rate is about 53.5%; a Manhattan resident's combined federal, state, and city rate is about 51%. The differences that matter are elsewhere: New York's treatment of RRSP growth, its estate tax cliff, and its residency audits on one side; BC's real estate taxes on a home left behind on the other.

Key takeaways

• BC's roughly 53.5% top rate sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• New York State's practical top rate is 9.65% and New York City adds up to 3.876%; combined with federal, about 51% in the city.
• New York's estate tax exemption is about $7.35 million with a cliff.
• New York's position on the treaty's RRSP deferral is less settled than most states'.
• BC's 12% combined GST and PST becomes 8.875% sales tax in the city.

The BC departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. BC real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. MSP ends on permanent departure.

Because New York taxes capital gains as ordinary income, gains realized before departure at BC's half inclusion are cheaper than the same gains realized as a New York resident. The Vancouver home is excluded from departure tax; kept empty it faces three vacancy taxes, so rent it or sell it.

New York's side

State brackets from 4% to 10.9% (the top rate only above $25 million); New York City resident tax from 3.078% to 3.876%; capital gains at ordinary rates; statutory residency at 183 days plus a permanent place of abode; 8.875% sales tax in the city; estate tax with an exemption near $7.35 million and a cliff at 105% of the exemption; low property tax on city co-ops and condos, high in the suburbs.

The RRSP in New York

Federally deferred under Article XVIII of the treaty. New York has historically declined to follow federal treaty exclusions in some contexts; whether RRSP growth must be added back on the New York return is a position to take with the guidance in hand. If it must, restructure the account toward low-yield holdings or draw it down before departure while still a BC resident.

Who makes this move

Vancouver film and media professionals to New York's production and streaming sector, BC finance and fintech workers to Wall Street, and tech workers to the city's engineering hubs.

Worked example

A Vancouver fintech engineer moves to Manhattan on June 30 with $250,000 of unrealized gain in a non-registered account, $500,000 in an RRSP, and a Vancouver condo sold in the departure year.

• Departure tax. $250,000 gain, $125,000 taxable, at about 53.5%: roughly $67,000. Realizing before departure avoids New York's ordinary-rate treatment.
• Condo. Sold as a resident under the principal residence exemption.
• RRSP. Federally deferred; New York position documented.
• New York. Combined top rate about 51%, a small cut from BC. Sales tax 12% becomes 8.875%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

New York State personal income tax rates and the New York City resident tax rates are published by the Department of Taxation and Finance. — New York State Department of Taxation and Finance, Tax rates and tables, https://www.tax.ny.gov/pit/file/tax-tables/

BC's Speculation and Vacancy Tax applies annually to residential property in designated taxable regions, with rates that depend on the owner's residency and tax status. — Government of British Columbia, Speculation and vacancy tax, https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax

Practitioner note

BC-to-New York clients often assume the move is tax-neutral and skip planning. The income tax is close to neutral; the RRSP position, the estate cliff, and the pre-departure gain realization are not. We treat it as a full departure file.

See also: Weighing Florida instead? See the Canada-to-Florida guide.

Next step

Fairlight prepares the BC departure return, the RRSP position, and the first-year federal, New York State, and New York City returns. See cross-border pricing or book a call.