Montreal to Miami: The TP-1, Revenu Québec, and the Biggest Rate Drop in the Country

Montreal to Miami is the largest income-tax rate drop of any Canadian city moving into the United States. Quebec's combined top marginal rate is about 53.3%; Miami has no city income tax and Florida has no state income tax, so the US side is federal only. The price of that drop is a departure year that runs through three tax authorities, because Revenu Québec administers its own income tax and expects its own final return.

Key takeaways

• Two Canadian returns in the departure year: the federal T1 and Revenu Québec's TP-1, both with the same departure date.
• Departure tax at about 53.3% combined. On a $300,000 unrealized gain, roughly $80,000.
• QST at 9.975% disappears. Miami-Dade's 7% sales tax replaces 14.975% combined GST and QST.
• RAMQ coverage ends on departure. QPP is taxed only in the US once you are a Florida resident.
• South Florida is the most established Quebec community in the US. Hollywood, Hallandale Beach, and Fort Lauderdale have served Quebec snowbirds for decades, and the permanent moves follow the same path.

The three-authority departure

The federal deemed disposition catches non-registered investments, private company shares, crypto, and property outside Canada; Quebec's rules mirror it. You report the deemed gain on federal Form T1243 (with T1161 for the property list if it exceeds $25,000) and on the Quebec equivalents. Quebec residents get a 16.5% abatement on federal tax, which is built into the 53.3% combined figure.

The IRS side starts the same year. A dual-status first return, the RRSP treaty position, FBAR on remaining Canadian accounts, and Form 8938 all begin with the year US residency starts, which for a long-time snowbird is often earlier than the move.

Montreal-specific items

• RAMQ. Coverage ends when you leave Quebec to settle outside Canada. Arrange US coverage to start the same month.
• QPP. Under Article XVIII of the treaty, QPP paid to a US resident is taxable only in the US.
• Montreal real estate. Not caught by departure tax. If you keep and rent a condo, NR6 and Section 216 apply federally, with Quebec equivalents. When you sell as a non-resident, Section 116 clearance is required.
• Private corporations. Montreal's professional and consulting corporations face the same CCPC loss and US CFC exposure as anywhere else, plus a Quebec corporate return to close.

Miami's side

No state income tax, no city income tax, no estate tax. Sales tax is 7% in Miami-Dade. Property tax runs higher than Montreal's on a like-for-like home, offset by homestead (own and occupy as your permanent residence on January 1, apply by March 1) which takes up to $50,000 off assessed value and caps annual assessment increases at 3%.

The RRSP stays tax-deferred in the US under the treaty. Florida has no income tax, so there is no state to disregard the deferral. 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's AI, gaming, aerospace, and finance sectors feed Miami's tech and fintech growth, and Quebec's long snowbird relationship with Broward County feeds the retiree stream. A third group is francophone Latin American business owners with Montreal operations moving their base to Miami for the Latin American market.

Worked example

A Montreal couple leaves on June 30 with $300,000 of unrealized gain in a non-registered account, $900,000 in RRSPs, and a Plateau condo they sell in the departure year.

• Departure tax. $300,000 gain, $150,000 taxable, at about 53.3%: roughly $80,000, reported on both the T1 and the TP-1.
• Condo. Sold as a resident, principal residence exemption on both returns.
• RRSP. No tax on departure. Periodic RRIF withdrawals later at 15%.
• Miami. No state or city income tax. Sales tax drops from 14.975% to 7%.

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/

"No tax upon estates or inheritances or upon the income of natural persons who are residents or citizens of the state shall be levied by the state, or under its authority." — Florida Constitution, Article VII, Section 5(a), http://www.leg.state.fl.us/statutes/index.cfm?submenu=3#A7S05

Practitioner note

On Montreal files the error we correct most often is a departure date that matches on the T1 and the US return but is missing from the TP-1, which leaves Revenu Québec assessing worldwide income for a year the client spent in Florida. Three authorities, one date, checked three times.

Next step

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