, you and your recipient will need to complete a $15 title transfer process at a local Secretary of State office (SOS). Your gift recipient may be exempt from paying sales or use tax on the gift if they are an eligible family member.

It’s best to involve your gift recipient in the car-buying process if you plan on gifting a new car so they can sign any legal and financial documents.
A used car must be free of any liens before you can complete the title transfer with your gift recipient.
Your signed title must include an odometer reading and the names and signatures of the previous owner and the giftee to complete the state title transfer process.

How to buy a car as a gift in Michigan

To gift someone a new car, your best bet is to take them to the dealership to

buy the car

with you. Consider the following advantages:

This ensures the recipient is happy with the car they get.

The dealership will typically handle the titling and registration, allowing your recipient to be on all the official paperwork.

They’ll be involved in any financing paperwork for a lease or

car loan

allowing you to avoid any legal complications with the transfer of ownership.

Keep in mind: You can only give a car as a gift if it does not have any active

car liens

. If you absolutely need a loan to gift a new car, you can add yourself as a cosigner with the gift recipient and take on the full responsibility of payments.

MORE:

What to bring when you buy a car

How to gift a used car in Michigan

If your goal is to help a family member by giving them a car you have on hand, you’ll have to complete a

Michigan title transfer

with the following steps:

Fill out the back of your

certificate of title

, listing the sales price as $0 or “GIFT”.

Provide proof of a

lien release

for the used vehicle, if applicable

Pay a $15 fee to file the title transfer at your local Secretary of State branch.

Tax exemption requirements: Your gifted car will be exempt from

Michigan sales tax

if the transfer of title is happening between you and a qualifying relative:

Spouse

Parent/Stepparent/Legal guardian

Sibling

Child

Grandparent

Grandchild

In-laws

Keep in mind: You’ll still be required to pay a federal gift tax if the value of your gifted vehicle is greater than $17,000.

MORE:

Gifting a car vs. selling it for $1 In Michigan

Step 1: Negotiate the terms of the gift with your recipient

You and your giftee will need to sit down and determine the logistical details of the car. Be prepared to discuss the following fees and car ownership expenses:

Cost	Michigan average
Title transfer fees	$15
Registration fees	Varies by model year
Sales tax (if applicable)	6% the vehicle’s retail value
Car insurance	$2,164 (liability only) $2,131 (full coverage) per year
Maintenance	$1,186 per year
Fuel	$1,500–$2,000 per year

Step 2: Record the gift with a bill of sale

bill of sale

is not required to transfer ownership of a gifted car in Michigan. However, it is a good idea to record the sale with this legal document in case any complications arise over time.

Make sure a bill of sale includes the following information if you choose to write one:

Your and your recipient’s names

Purchase price of $0

Description of the gifted vehicle make and model

Vehicle identification number (VIN)

MORE:

How to write a bill of sale

Step 3: Purchase Michigan liability insurance—or full coverage

Before you can complete the title transfer, your recipient will need to show proof of a valid auto insurance policy that meets

Michigan’s minimum insurance requirements

. Michigan drivers must carry at least:

$20,000 per person/$40,000 per accident of bodily injury liability coverage

$10,000 per accident of property damage liability coverage

Personal injury protection (PIP)

Property protection insurance (PPI)

Expert tip: You and your recipient may want to go the extra mile with a

full-coverage insurance policy

if gifting a relatively recent vehicle. This will include the state’s

liability insurance

requirements plus additional coverage for accidents, inclement weather, theft, and more.

MORE: How to get cheap car insurance for young drivers

Step 4: Transfer the vehicle title

The most important element of the car gifting process is

transferring the title

, which legally transfers ownership from the current vehicle owner to the new owner.

What to do: You and your recipient will need to head to a Secretary of State (SOS) branch office with the following documents to complete the car title transfer:

Completed original title assignment with the sales price as “GIFT” or “$0”, the buyer’s name, the seller’s name, and both signatures

Odometer disclosure statement (or odometer reading on the title)

Proof of insurance

Proof of a lien release from previous lienholders, if necessary

The vehicle’s current

Michigan license plates

if you wish to transfer them to your recipient

Appointment of Agent form

(Form TR-128) if your recipient cannot be present at the SOS office for the title transfer

Payment for the $15 title transfer fee

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What to expect: After you’ve completed all necessary steps, your recipient should receive their new certificate of title in the mail within 14 days. They’ll then be responsible for taking care of their

vehicle registration

MORE:

How to register a car in Michigan

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