For Canadian residents with a cabin, condo or rental in Washington
Canadians With Property in Washington State: What the US and Washington Tax
Washington is the closest US state for many British Columbians, and its tax picture is simple at state level today: no individual income tax, and real estate is outside its capital gains tax. The federal rules still apply in full, and a new state income tax for very high incomes is scheduled for 2028.
Quick answer
Does a Canadian with a Washington rental pay Washington income tax?
Not currently. The Washington Department of Revenue says the state does not currently have an individual income tax; a 9.9% tax on adjusted gross income over US$1 million begins January 1, 2028, under Senate Bill 6346 (WA DOR). The federal 1040-NR, the real property election and FIRPTA on a sale still apply.
At a glance
- Washington income tax
- None currently; 9.9% on AGI over US$1 million from January 1, 2028
- Washington capital gains tax
- Real estate is exempt
- Federal return
- Form 1040-NR with the real property election
- Sale
- Federal FIRPTA withholding
Washington's rules
Income tax. "Washington does not currently have an individual income tax," says the Department of Revenue. The 2026 Legislature passed Senate Bill 6346: from January 1, 2028, a 9.9% tax applies to individuals and joint filers with annual adjusted gross income above US$1 million, with first returns due in April 2029 (WA DOR: Income tax). The state says more guidance on who must file and how income is calculated will follow; it has not yet explained how the new tax applies to nonresidents such as Canadian owners (WA DOR FAQ).
Capital gains tax. Washington's 7% capital gains tax (RCW 82.87) exempts the sale of real estate (WA DOR: Capital gains tax). Selling a Washington cabin or rental is therefore outside it; stocks and other long-term assets are not.
IRS rules that apply in every state
| Topic | Rule | Source |
|---|---|---|
| Rent | 30% withheld from gross rent unless you elect under Code section 871(d) to treat it as effectively connected; with the election you file Form 1040-NR on the net | Pub 519 |
| Sale | FIRPTA withholding under Code section 1445: generally 15% of the amount realized; 10% if the buyer will live in it and the price is US$1,000,000 or less; none at US$300,000 or less in that case | Pub 515 |
| Days in the US | Snowbirds who pass the substantial presence test can file Form 8840 to claim a closer connection to Canada | Pub 519 |
More: selling US property, FIRPTA, snowbird days and Form 8840.
Treaty and law sources for Washington
Canada-US income tax treaty, general effective date (IRS Table 3): treaty January 1, 1985; 3rd protocol January 1, 1996; 4th protocol December 16, 1997; 5th protocol January 1, 2009 (IRS Table 3; IRS treaty documents).
| Treaty article | What it covers for a Washington owner |
|---|---|
| Article IV (Residence) | the tie-breaker for someone resident in both countries, starting with where you have a permanent home |
| Article VI (Income from Real Property) | rent from Washington property may be taxed in the US |
| Article XIII (Gains) | the US may tax the gain on selling US real property |
| Article XXIV (Elimination of Double Taxation) | how Canada and the US relieve double tax on the same income |
US law: Code section 871(d) real property election (Pub 519); Code section 1445 FIRPTA withholding (Pub 515); Form 8840 closer connection (Pub 519). Canadian tax on the same property is for your Canadian accountant.
How we help
Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the federal 1040-NR for Washington rentals and the year-of-sale return that settles FIRPTA withholding. Written quote first. Selling? See selling US property as a Canadian.
Common questions
Does Washington State tax a Canadian's rental income?
Not currently: Washington has no individual income tax. A 9.9% tax on adjusted gross income over US$1 million starts January 1, 2028.
Is the sale of a Washington property subject to Washington capital gains tax?
No. Real estate is exempt from Washington's capital gains tax.
What federal tax applies when a Canadian sells Washington property?
FIRPTA withholding by the buyer (generally 15%, lower for some homes the buyer will live in), and the gain is reported on Form 1040-NR.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- Washington DOR: Income tax
- Washington DOR: Frequently asked questions about income tax
- Washington DOR: Capital gains tax
- IRS: Publication 519
- IRS: Publication 515
- IRS: Canada tax treaty documents
- IRS: Tax treaty tables (Table 3, list of treaties)
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Selling US property, FIRPTA, Snowbird days.
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