Updated at: 24-07-2023 - By: micdot

Car gifts in the United States come with a few legal and financial considerations. This is how we’re going to settle them. This author has been carefully screened to ensure that he or she is qualified to write about the subject at hand. On our website, you may find out more. It’s possible that you’ll give an automobile to a family member or a friend for any number of reasons. In some cases, a graduating student may be looking for a new set of wheels. Or perhaps a close friend is in need of a ride since they are strapped for cash. If you want to give someone an automobile in the United States, you must know the right protocol. In addition to ensuring that everything goes according to plan, this will also safeguard you as the gift-giver. Fortunately, we’ll go over all you need to know about giving a car as a present right here!

Here are a few things to think about before you start the car-gifting process. Then, we’ll go through each step in depth to help you get started. Finally, we’ll evaluate whether or not it’s worthwhile to sell an automobile for $1 rather than give it as a gift.Time to get this party started!

Contents of the Book

Before Gifting A Car – Consider These First

Is The Car You’re Gifting Paid Off?

If someone else has a claim on the vehicle you wish to give, you’ll have to get them out of the way before you can give it to someone else. When it comes to bank loans, you’ll have to pay it all back in full if you owe any money at all. You’ll need a letter from the bank stating that the debt has been repaid if a lienholder is listed on the title. Your new title will be issued to you once you present this letter to the Department of Motor Vehicles (DMV). You can proceed with the giving process if there is no lienholder indicated.

Can The Giftee Afford Owning A Car?

Owning a car comes with a slew of unanticipated expenses. Insurance, petrol, upkeep, and ordinary wear and tear are just a few examples. You might rethink giving your car to someone if they can’t afford these extras.

Can You Afford To Pay The Car Gift Tax?

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Gifting an automobile eliminates the need for the recipient to pay sales tax. However, if the vehicle’s market value exceeds $15,000 ($30,000 for a married couple), most jurisdictions impose a gift tax. If you live in Florida, you won’t have to worry about paying gift tax. There are no additional fees to pay in Florida when you’re gifting someone an automobile. How much will gift tax cost?

In general, it’s between 18% and 40%, so think carefully before giving someone else your automobile as a present if you can’t afford that much. To find out what your state’s fees are, go to the DMV’s website.

Does The Giftee Have Insurance?

If the recipient does not have proof of insurance, you cannot complete the procedure of donating a vehicle. Fortunately, getting an insurance policy set up is as simple as having the recipient call an insurance provider (or adding it on to an existing one). It is possible to include a child or a relative on your policy, but it is important to be aware of the dangers first. A smooth process is what you desire, of course. Fortunately, if you’ve gone through the information listed above, you’re good to go. Now let’s look at how to give an automobile legally in the United States.

How To Gift A Car

Step #1 – Come To An Agreement With The Giftee

Don’t assume that just because you’re giving an automobile to a family member or a friend that you don’t need to discuss the logistics. Among these include determining who will pay the DMV fees and gift tax (if applicable), whether or not they have insurance, and whether or not they can afford to purchase a car. In California, for example, a $15 title transfer fee and any applicable tax must be paid when a car is given as a gift. Who’s going to foot the bill for this?

You can assure a smooth process by working out the nitty-gritty details in advance.

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Step #2 – Write Up A Bill Of Sale

One way to prove the transfer of goods is to use a bill of sale, which is a legally binding document. Filling out one of these forms is a must if you’re the one delivering the gift, just in case something goes wrong. This is what a bill of sale should include:

Model and year of the car that’s being given away

The cost of a new car

The Vehicle Identification Number (VIN) (vehicle identification number)

Distance traveled as measured by the odometer at the moment

Everyone’s name, signature, and the date on it

The presence of a notary public is required in several places when you sign a bill of sale. Among them:




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The Mountain State

Step #3 – Transfer The Title Into Their Name

In order to finish the giving process, you’ll need to visit to the DMV office. Some states may require you to go to a separate tax office in order to complete the process. A valid driver’s license and proof of insurance will be required from the recipient. You, as the giver, are required to provide identification and the title of the car you are presenting as a gift (after filling out the back section). Final steps include paying the fees (which should have been discussed beforehand following our guidance) and signing over the keys to the vehicle.

Instead Of Gifting My Car – Can I Sell It For $1?

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Selling a car for one dollar is a tax-avoidance strategy that only charges sales tax on the actual sale price of the vehicle. You should realize that the amount of sales tax you’ll have to pay in California (as an example) is based on how much it’s worth, not how much you paid for it. Given that most states begin charging gift tax on vehicles with a market value of $15,000 or higher, gifts below this threshold are generally preferable.

You should make your own calculations to determine the best possible outcome for both parties if you’re dealing with a sum greater than $15,000