Vancouver to San Antonio: The Real Estate Arbitrage Move and Zero State Income Tax

Vancouver to San Antonio is the largest housing arbitrage of any Canadian city pair: a Vancouver home sells for four to five times an equivalent San Antonio home. 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 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.
• Texas has no state income tax; US tax is federal only.
• BC's 12% combined GST and PST becomes 8.25% sales tax in San Antonio.
• Bexar County property tax runs about 2%, on home prices among the lowest of any major Texas metro.
• 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. MSP ends on permanent departure.

San Antonio's side

No income tax; Bexar 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. Home prices are among the lowest of any major Texas metro.

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

Vancouver software and cybersecurity engineers to San Antonio's tech and defence contractors, BC finance staff to USAA and Frost Bank, Vancouver healthcare professionals to the South Texas Medical Center, and BC retirees choosing San Antonio for its housing costs.

Worked example

A Vancouver software engineer moves to San Antonio 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 $1.6 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%.
• San Antonio. No state income tax. Sales tax 12% becomes 8.25%. Property tax on a $400,000 home around $8,000 before homestead.

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/

The speculation and vacancy tax is an annual tax based on how owners use residential properties in areas in B.C. affected most by the current housing shortage crisis. — Government of British Columbia, Speculation and vacancy tax, https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax

Practitioner note

Vancouver-to-San Antonio movers arrive with a large cash position from the condo sale. Not a TFSA, not Canadian mutual funds. We set up the post-move portfolio with the US filings in mind, and we make sure the condo is sold or rented before the departure year ends.

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 San Antonio clients. See cross-border pricing or book a call.