Vancouver to Austin: The Tech-Lifestyle Move and Zero State Income Tax

Vancouver tech workers who do not want Seattle's rain or San Francisco's prices are choosing Austin, and the tax picture rewards them: BC's combined top rate of about 53.5% becomes a federal-only 37%, with no Texas income tax. The two things that decide the file are the departure tax on equity and what happens to the Vancouver home.

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 Austin.
• Travis County property tax runs about 1.8% to 2%; the housing trade from Vancouver is still a large cash release.
• A Vancouver home kept empty faces three vacancy taxes. MSP ends on permanent departure.

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. The Vancouver home is excluded, but kept empty it invites BC's Speculation and Vacancy Tax, Vancouver's Empty Homes Tax, and the federal Underused Housing Tax; rent it under NR6 and Section 216, or sell in the departure year.

Austin's side

No income tax; property tax around 1.8% to 2% effective with a homestead exemption and a 10% annual appraisal cap; 8.25% sales tax; no estate tax. The housing trade: a $1.6 million Vancouver condo becomes a $700,000 Austin house with money left over, and a property tax bill of $12,000 to $14,000 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.

Equity

RSUs vesting after the move are split by working days between Canada and the US; no Texas layer. Founder shares in a Vancouver startup are deemed sold on departure at fair market value; get a valuation before setting the date.

Who makes this move

Vancouver software engineers to Austin's tech employers and startups, BC VFX and game developers to Austin's studios, and Vancouver founders relocating companies to Texas for cost and talent reasons.

Worked example

A Vancouver software engineer moves to Austin on May 31 with $250,000 of unrealized gain in a non-registered account, $400,000 in an RRSP, RSUs vesting after the move, and a Mount Pleasant condo sold in the departure year.

• Departure tax. $250,000 gain, $125,000 taxable, at about 53.5%: roughly $67,000.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• RSUs. Vests split by working days; no Texas layer.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Austin. No state income tax. Sales tax 12% 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

"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

Vancouver-to-Austin movers sometimes keep the condo as a "return option" and leave it empty. Three vacancy taxes later, it is the most expensive option they had. Rent it from the first month or sell it in the departure year.

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

Next step

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