Montreal to Houston: Aerospace, Energy, and the Three-Authority Departure

Montreal's aerospace engineers land at NASA's contractors and Houston's aviation employers, its energy professionals at the majors, and its AI and software talent at the city's growing tech sector. The move is the largest rate cut available: Quebec's combined top rate of about 53.3% becomes a federal-only 37%. The departure year runs through Revenu Québec, the CRA, and the IRS.

Key takeaways

• Two Canadian departure returns: the federal T1 and Revenu Québec's TP-1, with matching departure dates.
• Quebec's roughly 53.3% 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.
• Quebec's 14.975% combined GST and QST becomes 8.25% sales tax in Houston.
• Harris County property tax runs about 2%. RAMQ ends on departure.

The three-authority departure

The federal deemed disposition applies to non-registered investments, private company shares, crypto, and property outside Canada; Quebec mirrors it. Report on federal Form T1243 (with T1161 if the property list exceeds $25,000) and on the Quebec equivalents. RAMQ ends when you leave Quebec to settle outside Canada. QPP paid later to a Texas resident is taxable only in the US.

Houston's side

No income tax; Harris County property tax near 2% effective with a homestead exemption and a 10% annual appraisal cap; 8.25% sales tax; no estate tax; strong homestead creditor protection.

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

Montreal aerospace engineers to NASA's Johnson Space Center contractors and Houston's aviation employers, Quebec energy professionals to the majors and oilfield services firms, Montreal AI and software talent to Houston's tech sector, and Quebec medical researchers to the Texas Medical Center.

Worked example

A Montreal aerospace engineer moves to Houston on June 30 with $220,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, and a Longueuil home sold in the departure year.

• Departure tax. $220,000 gain, $110,000 taxable, at about 53.3%: roughly $59,000 across the T1 and TP-1.
• Home. Sold as a resident under the principal residence exemption on both returns.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Houston. No state income tax. Sales tax 14.975% becomes 8.25%.

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

Revenu Québec sets out the income tax obligations of individuals who cease to be resident in Québec, including the deemed disposition of property on departure. — Revenu Québec, Leaving Québec, https://www.revenuquebec.ca/en/citizens/your-situation/residence-status-and-tax-obligations/leaving-quebec/

"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/

Practitioner note

Montreal-to-Houston is a three-authority departure into a zero-tax state. The US side is simple; the TP-1 departure date and any Quebec corporate return are the items that get missed.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Montreal to Miami guide.

Next step

Fairlight prepares the T1, the TP-1, and the first-year US return for Houston clients. See cross-border pricing or book a call.