BC to Texas: The PST Disappears, the Property Tax Arrives, and the Departure Tax Runs at BC's Top Rate

BC to Texas is one of the largest rate drops on the map. BC's combined top rate is about 53.5%; Texas has no state income tax, so the US side is federal only, topping out at 37%. The corridor runs on tech (Vancouver to Austin), energy and LNG (BC's north coast projects to Houston), and corporate relocations to Dallas. What Texas charges instead is property tax, and what BC charges on the way out is the departure tax at one of the highest effective rates in Canada.

Key takeaways

• BC's roughly 53.5% top rate sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• Texas has no state income tax; US tax is federal only.
• BC's 12% combined GST and PST becomes 8.25% sales tax in the major Texas cities.
• Texas property tax runs 1.6% to 2.2% of assessed value; file the homestead application after you move in.
• A Vancouver home kept behind faces BC's Speculation and Vacancy Tax, Vancouver's Empty Homes Tax, and the federal Underused Housing Tax if it sits empty.

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.

At about 53.5%, BC's effective exit rate on gains is roughly 27 cents per dollar. Pre-departure loss harvesting and the departure month matter. The Vancouver home is excluded, but kept empty it invites three vacancy taxes; rent it under NR6 and Section 216, or sell in the departure year.

Texas's side

No income tax; property tax at 1.6% to 2.2% effective, with a homestead exemption on school district taxable value and a 10% annual appraisal cap; 8.25% sales tax in Houston, Dallas, Austin, and San Antonio; franchise tax on businesses above a multi-million-dollar revenue threshold; no estate tax; strong homestead creditor protection.

The trade on housing: a $1.8 million Vancouver home with a property tax bill in the low thousands becomes a $700,000 Austin home with a bill of $12,000 to $15,000 before homestead.

The RRSP in Texas

Untouched on departure, federally deferred under the treaty, with no Texas layer. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit.

Who makes this move

Vancouver software and VFX professionals to Austin, BC energy and LNG staff to Houston, Vancouver biotech to the Texas Medical Center, and BC finance and corporate staff to Dallas.

Worked example

A Vancouver software engineer moves to Austin on April 30 with $300,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, RSUs vesting after the move, and a Vancouver condo sold in the departure year.

• Departure tax. $300,000 gain, $150,000 taxable, at about 53.5%: roughly $80,000.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• RSUs. Vests split by working days between Canada and the US; no Texas layer.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Austin. No state income tax. Sales tax 12% becomes 8.25%. Property tax on a $700,000 home around $13,000 before homestead.

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

"Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent." — Texas Comptroller of Public Accounts, Sales and Use Tax, https://comptroller.texas.gov/taxes/sales/

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-Texas is the corridor where the Vancouver home decision is most often deferred and most expensive. A condo kept empty "until Austin works out" accrues the Speculation and Vacancy Tax, the Empty Homes Tax, and the Underused Housing Tax in the same year. Rent it from the first month or sell it in the departure year.

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

Next step

Fairlight prepares the BC departure return, the property decision, and the first-year US return for Texas clients. See cross-border pricing or book a call.