Maybe you have a child that is graduating from school or a relative in need of a vehicle. It might even be that you know someone who is struggling financially and you would like to gift them a car. Whatever the reason, there may come a time when you would like to gift a car to someone else. Given that the process of gifting a vehicle is much different than buying one, it’s important to know the process of how it works and also understand the tax implications of giving a car to someone else.
Make Sure the Car is Paid For
You will not be able to gift a car or transfer a title unless you own the car. Therefore, if you have an outstanding balance on your car loan, you must pay it off completely before you can give the car as a gift. Be sure you obtain a copy of this final payment from your bank or dealer’s lending department to confirm the full payment.
Consider the Recipient’s Financial Situation
Even though you are gifting a car to someone else for no financial gain, you still need to go over the terms of the arrangement with the recipient. Make sure they understand that once you give them the car, they will be responsible for other costs such as gas, insurance, and maintenance. You also want to work out who will be paying the taxes and other fees associated with transferring the title. If the recipient is unable to afford the expenses associated with owning the car, you may want to reconsider your decision.
Be Prepared to Pay the Gift Tax
While there may be no sales tax, there may be a federal gift tax involved with gifting your vehicle. The requirements differ every year, but typically a gift tax is applicable when the fair market value of the vehicle exceeds $15,000 for a single person or $30,000 for a married couple. The gift tax can be anywhere between 18-40%.
Write Up a Bill of Sale
Without a formal bill of sale, there is no proof that someone else owns the car and you may still be liable. You can avoid any misunderstandings by writing up a bill of sale that includes the following information:
- Make and model of the vehicle
- Purchase price of the vehicle
- Odometer reading
- Your signature and the signature of the giftee
Transfer the Vehicle Title
You must transfer the vehicle title to officially release ownership of the vehicle. The easiest way to transfer the title is to go to your local DMV, fill out the necessary paperwork, and pay a transfer fee. At this time you will list the price of the car as gift. Since vehicle transfer laws and fees vary by state, you may need to familiarize yourself with this information before gifting your vehicle.
Make Sure the New Owner is Insured to Drive the Car
Now that you are ready to hand the keys over, you need to make sure the giftee is properly insured to drive the car. They will not be able to legally drive the car without insurance. If the giftee already has car insurance, they simply need to contact their insurance company to add this vehicle to their existing policy. If they do not have insurance, they will need to sign up for a new policy.
Frequently Asked Questions
Honest Answers to Your Car Shipping Questions
Yes, we always ask for your specific pickup and delivery addresses, if the carrier can get right to the addresses you provide, they will. If the addresses that you give us are not safely accessible for a Multi-car carrier, however, you will need to make arrangements with the driver to meet at a nearby location where the carrier can safely get in and out.
People do it all the time (rarely for free) but the official answer is no.
Not what you wanted to hear, we know, but that is the honest answer.
We are not licensed to broker the shipment of household goods and, likewise, no car carrier that operates in the USA is licensed to transport them from state to state either. Despite what you might be being told by other car shipping companies you may speak with.
Remember, at the end of the day we're all salespeople, and the true answer to this question is not a great selling point.
You will hear a lot of companies tell you that you can put up to 100 pounds of items in the trunk, but that is not entirely true. That fact is that items of that amount are fairly common and the department of transportation is probably not going to split hairs and fine the trucker over items of that amount, provided they are not over their weight limit. They could fine them, however, if they see a vehicle stuffed full of personal items so the car carrier will most likely try to negotiate something with you to cover themselves against any costs they could incur. It's not something we can build into your contract though.
We have a short and helpful video on this topic in our user videos.
Only in rare cases and car carriers will usually charge a premium to make it happen.
All dates given by car carriers are typically estimates and projections.
For this reason (and to keep your cost down) we ask that you build in some flexibility and give us the earliest possible date you would be WILLING to release the vehicle, even though it may not be your preferred date.
We'll put you in direct contact with your car carrier and the driver will also typically call you the afternoon or evening before your pick up and delivery (they won't just show up unannounced, and if they do we want to hear about it). However, car carriers are out on the road battling traffic, weather and any number of other factors that can and do throw them off of their pickup and delivery projections from time to time.
If the projected dates we give you come and you are unable to make contact with your carrier, please call our office immediately so that we may help resolve the situation.
The average transit time from pick up to delivery on any vehicle going coast to coast will average 7 to 10 days. From there you can figure your transit time based on how far your vehicle is traveling, i.e. from either coast to the Midwest might average 3-7 days.
Even better, we do not even ask for payment until we have you confirmed for pickup by a safe, reliable, fully insured, direct car carrier. If for any reason you do not ship your car with the carrier that we arrange for you, there is no fee.
The fees paid directly to the carrier however, (in most cases, their fees are not paid until your vehicle is delivered) are not directly controlled by us, so any requests for a refund of the carrier's portion would need to be addressed with the carrier directly.
Of course! And you are always backed by our Damage Free Guarantee policy.
Part of what you pay us for is to verify that the car carrier that we put you on is covered by the proper amount of insurance and that everything is up to date.
There is never any additional cost to you for this coverage, and their insurance is always primary.
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