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.
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.
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.
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%.
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
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.
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
Answers to Your Car Moving Questions
The hardest thing for people researching car moving companies to understand is that the prices they are getting are not hard and fast gaurantees, but rather ESTIMATES of what one company thinks it will take to get a vehicle moved promptly versus another company's opinion of what it will take. Don't be fooled, there are not carriers committed to take your vehicle at these quoted prices, the company you choose will still have to get to work getting a carrier to commit to move it at the price they quote you.
Your total price breaks down into two parts, the broker's fee (or 'deposit' as everyone calls it) and the carriers fee (your COD amount) Make no mistake about this, EVERYONE YOU ARE GETTING SALES CALLS FROM IS GOING TO BROKER YOUR MOVE. In this industry, there are brokers who try to fool you into thinking that they are the actual carriers and there are an equal amount of carriers who sell themselves on the fact that they have a truck or two but are not being honest about the fact that they broker out 90% of the orders they book. Here is a quick easy way to tell, if a company takes an up front fee, whether they call it a deposit or any other name, they are a broker. Carriers do not take any payment until the vehicle is delivered.
In our opinion, you are crazy to do so. Have you ever been paid up front for the work that you perform for your employer? Why would you pay a fee up front when there are reliable and trustworthy companies like ours that won't ask for it until we provide you with your carriers details?
The average transit time from pick up to delivery on any vehicle going coast to coast will be between one and two weeks. 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.