Vancouver to Las Vegas: The Real Estate Arbitrage and Zero State Income Tax

Vancouver to Las Vegas is a housing arbitrage: a Vancouver condo sells for two to three times an equivalent Henderson home, and Nevada's property tax is a fraction of what the price would suggest. The income tax side is a large cut too: BC's combined top rate of about 53.5% becomes a federal-only 37%. The Vancouver home 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.
• Nevada has no state income tax; US tax is federal only.
• BC's 12% combined GST and PST becomes 8.375% sales tax in Clark County.
• Nevada property tax is among the lowest in the US, with a 3% annual cap on owner-occupied homes.
• 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.

Las Vegas's side

No income tax; Clark County sales tax 8.375%; property tax among the lowest in the US, roughly 0.5% to 0.7% effective, with a 3% annual cap on increases for owner-occupied homes; no estate tax; no inheritance tax.

The RRSP in Nevada

Untouched on departure, federally deferred under the treaty, with no Nevada 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 film and VFX professionals to Las Vegas's production and entertainment technology firms, BC software engineers to the gaming technology companies, Vancouver hospitality staff to the resort operators, and BC retirees to Henderson.

Worked example

A Vancouver VFX artist moves to Henderson on May 31 with $200,000 of unrealized gain in a non-registered account, $350,000 in an RRSP, and a Vancouver condo sold for $1.4 million 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; periodic withdrawals later at 15%.
• Henderson. No state income tax. Sales tax 12% becomes 8.375%. Property tax on a $550,000 home around $3,200.

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

Effective January 1, 2020 the Clark County Sales and Use Tax rate increased to 8.375%. — Nevada Department of Taxation, Sales Tax & Use Tax, https://tax.nv.gov/tax-types/sales-tax-use-tax/

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-Nevada is the corridor with the largest property tax relief of any US destination, and the largest penalty for keeping the Vancouver condo empty. Sell or rent 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 Las Vegas clients. See cross-border pricing or book a call.