Gifting a Car in Maryland
You can gift a car in Maryland if you fill out the proper forms, transfer the title, and pay the $100 titling fee.
Written by Macy Fouse
Reviewed by Kathleen Flear
Gifting a car in
Maryland
may help you waive taxes and fees that come with a private vehicle sale—but you’ll still need to pay title transfer and registration fees and fill out a Vehicle Gift Certificate to certify that it’s a gift. Buying a car for someone is one of the most generous gifts you can give, and the recipient is sure to be grateful to you until the end of time. Unfortunately, the process of gifting a car can be a bit more complicated than just picking it out at the dealership and driving away. Plus, every state has its own set of rules about vehicle gifts.
To ensure your gift-giving is as smooth as possible, we outlined a handy manual to gifting a vehicle in Maryland. In this article, you’ll find all you need to know, including how to buy a car gift, what to avoid, and the fees you can avoid by gifting rather than selling.
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How to buy a car as a gift in Maryland
The easiest way to gift someone with a new car is to just bring them to the dealership with you. This way, the recipient can be involved with the shopping and financing process, and the dealership will generally take care of the titling as well.
A car can only be given as a gift if it
doesn’t have a lien
. To give a car with a lien, you’ll need to pay off any loans to transfer the title.If you’re trying to gift a car to a newly-licensed family member who can’t afford to buy a new car without a loan, you should include them in the car-buying process. That way your giftee gets their choice car while avoiding possible legal or financial snags.
Key Takeaway To give a car as a gift, you must have the title in hand without a lien. That’s why it’s a good idea to bring the recipient to the dealership with you.
How to gift a used car in Maryland
If you want the Christmas-car-commercial-level driveway reveal, your best route will be to transfer a car you already own to your recipient. If you can buy a newer model outright, or if you’ve paid off the loan for a vehicle, you can make it a gift.
If your gift is more to help a loved one by giving them a car you aren’t using, then it is making it a major surprise, you’ll have to follow the same process. Here’s how you can legally gift a car in Maryland.
Negotiate the terms of the gift with your recipient
After the thrill dies down, you’ll need to talk to your recipient and decide on the details about the car. A
title transfer
comes with fees and paperwork, and car ownership comes with regular expenses as well—even if the car is a gift. In
Maryland
, a title transfer will require a $100 fee, but you may have to pay additional fees based on your situation. It’s also a good idea for both the gifter and giftee to go to the Motor Vehicle Administration (MVA) together to avoid any confusion or mix-ups. The gift-giver and recipient will also decide who will pay for the title transfer. Other expenses you’ll want to discuss are car maintenance, insurance, fuel, and any additional expenses associated with the car. You don’t want to gift a car if the recipient isn’t expecting a financial burden along with it.
Here’s a table of the costs you should discuss with your recipient:
Cost | Maryland average |
|---|---|
Title transfer | $100 |
Registration fee | $135 |
Insurance | $2,424 (liability only)
$2,797 (full coverage) per year |
Maintenance | $1,186 per year |
Fuel | $1,500-$2,000 per year |
Record of the gift with a bill of sale
Even if it’s a gift and you don’t exchange any money, you’ll still need to complete
a bill of sale
. A Maryland bill of sale
is required for vehicles less than eight years old or if the sale price is over $500. A bill of sale will act as proof of your transaction which can protect you from legal consequences in the future. Both parties will need to sign the bill of sale to verify that everyone agreed to the terms of the gift.
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Transfer the vehicle title
The most important part of the car gifting process is transferring the title, which legally transfers ownership of the car to your recipient. In Maryland, you’ll have to apply for a title for the gift vehicle in person at an MVA branch. Here are all the title documents you’ll need:
- The vehicle’s existing title. Be sure to fill out the two sections on the back called Assignment of Ownership and Application for Title and Registration. As the gifter, you’ll sign as “seller” and your recipient will sign as the “buyer.”
- Gift certification. If this is a gift between family members, you’ll have to fill out theApplication for Maryland Gift Certificationand prove the familial relationship via birth certificate, marriage certificate, etc.
- Gift title transfer. For specific cases when an aunt or uncle over 65 gifts a vehicle to their niece or nephew, you’ll have to complete theGift Title Transfer – Certified Statement (VR-299). If the aunt or uncle is younger than 65, the vehicle cannot be counted as a gift and will be charged an excise tax.
- Lien release. If the gifted vehicle has a lien, you have to submit proof that the lien has been released. This could be through a Maryland Security Interest Filing or simply a signed letter from the lienholder specifying the lien has been released.
- Safety inspection certificate. If the recipient plans to register the vehicle, you’ll have to bring in a Maryland Safety Inspection Certificate dated no later than 90 days before the title release date. This is not required if the gift was given between immediate family members (e.g. parent to child).
You may also need an odometer statement and proof of a Maryland car insurance policy.
After you complete all the necessary forms, you can successfully get the new title. You can also register the vehicle at the MVA on the same day. The new title will be mailed to you, and you’ll get the new registration card, license plates, and stickers on the same day.
Purchase Maryland liability insurance—or full coverage
No matter who pays for what, the gifted car needs to be covered with a valid Maryland car insurance policy. After completing this step, your giftee is free to speed away in their new car!
How to find affordable car insurance in Maryland
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FAQs
Do you have to pay taxes on a gifted car in Maryland?
If you received the gift from an allowable family member, you won’t have to pay the 6% excise tax. Otherwise, Maryland does not consider it a gift and you’ll have to pay the 6% excise tax.
Is it better to gift a car or sell it for $1 in Maryland?
Gifting a car is the easier route if you’re giving it to a family member or don’t mind paying the 6% excise tax. But because of Maryland’s strict allowances on who can give a legitimate gift, you may want to consider other options.
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