Transferring vehicles between family members is a pretty common practice.
And in some states, gifting the vehicle rather than selling in comes along with some tax savings.
However, in order to gift a car to a family member properly, you’ll still need to make sure to go through the appropriate title transfer process and present all the necessary paperwork and documentation.
This page will cover the basic steps involved with gifting your car to a family member.
What’s the difference between a vehicle transfer between family vs. non-family?
The rules in each state vary, but in most cases a family gift transfer applies to family members related by blood or legal adoption.
During a normal title transfer, the buyer will typically need to pay a tax based on the purchase price of the vehicle.
Additionally, during a normal transfer the seller is usually responsible for completing any necessary smog and safety inspections before the transfer takes place.
In the event of a family member gift transfer, tax and inspections are often exempt. Be sure to confirm with your local Department of Motor Vehicles.
Tax Implications When Gifting a Vehicle
Tax laws vary from state to state when it comes to gifting a vehicle.
Be sure to complete the necessary paperwork for tax purposes, which may include:
- A Statement of Facts form.
- Affidavit of Gift or Inheritance.
- Use tax exemption forms.
- Bill of Sale Gift form.
In some states, gifting a vehicle to a family member will be exempt from sales and use tax.
In other states, an inherited property or gift tax may still apply.
Be sure to confirm with your state DMV and local tax authorities.
Transfer a Car Title to a Family Member
Aside from some of the special tax and inspection exemptions that may apply in your state, transferring a vehicle to a family member is pretty much the same as transferring the title to any buyer.
To transfer a car title to a family member, you’ll need to:
- Fill out and sign the certificate of title.
- Complete the odometer disclosure statement.
- If available, be sure to mark that the transfer is a gift.
- Complete a Bill of Sale and state that the vehicle is a gift to a family member.
- Complete any necessary tax exemption forms, if applicable.
- Have the new owner fill out the appropriate section on the title.
Next, the new owner will need to submit an application for new title and registration to the DMV along with:
- The signed and filled out title.
- The bill of sale.
- Proof of car insurance.
- Any other necessary documentation.
- Payment for the transfer, title, and tag fees.
Transfer a Car Title to a Family Member in a Different State
If your family member lives in a different state, the process for gifting a vehicle to them is the same as above.
However, the tax and inspection benefits may not carry over to their state.
You’ll still need to provide them with the signed over title, and they will need to apply for a title and registration in their home state.
Related Title Information
Need more information regarding vehicle titles and license plates? We’ve got you covered!