Can You Register A Vehicle As A Gift?

Updated September 21, 2020: You lot may decide to gift a vehicle if your kid received their driver'due south license. Or maybe you can no longer drive for medical reasons or want to help a family member in dire need. Regardless of why you decide to gift a vehicle, in that location are a number of requirements and steps you need to have earlier handing over the keys.

Here's what you need to know virtually gifting a vehicle.

An ebook to eread while you're eprocrastinating eeverything eelse. Download "Finance Your Future" today.

1. You lot must ain the vehicle outright

You tin can't gift a vehicle or transfer its title unless you own information technology outright. So, if y'all still owe money on a vehicle, you lot'll have to wait to souvenir it until you pay it off. If the vehicle is paid off, contact your bank or dealer's lending department to confirm the full payment.

2. Consider the giftee's finances

Volition the person you gift the vehicle to be able to afford the insurance, fuel, maintenance and repair costs that come with owning it? (Hither are another subconscious costs to buying a car.) Inquire yourself whether y'all're willing to comprehend these costs for them. If the answer is no, you may desire to rethink your decision to gift them a vehicle.

3. The giftee may take to pay a gift tax

The good news? Gifting a vehicle means no sales tax. Simply the person giving the gifted vehicle to may have to pay a federal gift tax. You volition need to file a federal gift tax return if you gave any gifts that exceed the $15,000 annual exclusion, simply you lot don't really have to pay gift revenue enhancement unless yous accept besides exceeded your lifetime exclusion, which is $xi.78 million in 2021.

4. Writing up a neb of sale

If at that place is no contract for the gifted vehicle, you may nevertheless be liable for the motorcar. Avoid this situation by writing up a neb of sale and making sure you lot and the giftee fill out the appropriate sections. The neb of sale should include the following details:

Make and model of the vehicle
Buy cost of the vehicle
VIN
Odometer reading
Your signature and the signature of the person y'all're gifting the car to

5. Y'all'll exist required to transfer your vehicle championship

By transferring your vehicle championship, you're releasing ownership of the vehicle to the person you're gifting it to. The easiest manner to transfer your vehicle title is to go to your local DMV, fill out the necessary paperwork and pay a fee. Since vehicle championship transfer laws and fees vary by state, become familiar with your state's laws.

six. You'll need to insure the giftee

Brand sure the giftee is properly insured to drive the car. They will be unable to drive the car legally without car insurance.

If the giftee already has car insurance, they can contact their insurer and add the vehicle to their existing policy. If they are a new driver or don't have insurance, they'll need to shop around for the all-time charge per unit and sign up for a new policy.

Correction, June 24, 2021: This article originally misstated how gift tax was assessed on vehicles. It's been updated to note that because of the lifetime gift tax exclusion, few people will end upwards paying gift tax.

Prototype: Morse Collection