Vancouver to Denver: Tech, the Outdoor Corridor, and Colorado's Flat 4.4%

Vancouver and Denver share mountains, an outdoor culture, and a tech workforce that moves between them. The tax picture is a large cut: BC's combined top rate of about 53.5% becomes about 41.4% in Colorado, and the property tax on a Denver home is lower than on a Vancouver one at a fraction of the price. The Vancouver home left behind is the planning item.

Key takeaways

• BC's roughly 53.5% top rate sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• Colorado's flat 4.4%; no percentage-based city income tax.
• Colorado follows the treaty's RRSP deferral.
• BC's 12% combined GST and PST becomes 8.81% sales tax in Denver.
• 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.

Denver's side

Flat 4.4% state income tax (TABOR surplus years can temporarily lower it); Denver's Occupational Privilege Tax is a flat few dollars a month rather than a percentage; 8.81% sales tax in the City of Denver; property tax among the lowest in the US at roughly 0.5% effective; no estate tax. Colorado also subtracts up to $24,000 of pension and annuity income for taxpayers 65 and older ($20,000 from 55 to 64), which covers RRIF and CPP income.

The RRSP in Colorado

Federally deferred under Article XVIII of the treaty and deferred for Colorado because the state starts from federal taxable income. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Colorado's flat rate after the pension subtraction.

Who makes this move

Vancouver VFX and game developers to Denver and Boulder's studios and tech firms, BC software engineers to Colorado's enterprise software employers, Vancouver outdoor-industry professionals to Colorado's recreation brands, and BC clean-tech staff to Colorado's renewable energy sector.

Worked example

A Vancouver game developer moves to Denver on May 31 with $200,000 of unrealized gain in a non-registered account, $350,000 in an RRSP, and a Vancouver condo sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.5%: roughly $53,500.
• Condo. Sold as a resident under the principal residence exemption. No vacancy taxes.
• RRSP. No tax on departure; federal and Colorado deferral.
• Denver. Combined top rate about 41.4%. Sales tax 12% becomes 8.81%. Property tax on a $700,000 home around $3,800.

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

The subtraction is generally limited to $20,000 each year or, for individuals age 65 or older, $24,000. — Colorado Department of Revenue, Social Security, Pensions and Annuities, https://tax.colorado.gov/income-tax-topics-social-security-pensions-and-annuities

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-Denver movers who keep the condo empty accrue three vacancy taxes in the same year while paying almost no property tax in Colorado. The asymmetry makes the sell-or-rent decision easy; the mistake is deferring it.

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 federal and Colorado returns for Denver clients. See cross-border pricing or book a call.