How Many Times Can You Gift a Car?
While you can gift a car as many times as you want, you’re limited when it comes to gift tax exemptions. Learn more here!
Written by Shannon Fitzgerald
Reviewed by Kathleen Flear
Table of Contents
- How many times are you allowed to gift a car?
- Requirements for gifting a car
- Is there gift tax on a gifted vehicle?
- How to find cheap insurance for a gifted vehicle
- FAQs
Load full table of contents
If you’ve got enough money—and heart—you can generally gift a car as many times as you want. That said, you will need to follow your state’s procedures to transfer the title and registration, and you’ll be limited in how much gift tax exemption you can claim.
Whether you’re handing down the old
Chevy
to your family’s newest driver or you’re giving a generous pick-me-up to a close friend, gifting a car can be a very heartwarming exchange. It can also be a confusing one. Transferring a title and registration require steps from both gift giver and recipient, and these steps (and their fees) can vary significantly state-to-state.Here to walk through what you can commonly expect is
Jerry
, the trustworthy super app
saving millions of drivers hundreds on car insurance
. From typical car gifting requirements to how much gift tax you can expect to pay, let’s take a look at the processes you’ll need to follow—no matter how many times you gift a vehicle.How many times are you allowed to gift a car?
As far as federal and state regulations go, you’re allowed to gift a car as many times as you want. However, there are some minor limitations when it comes to gift tax exemptions.
The IRS requires all single individuals to pay a gift tax on any gifts valued over $16,000 in 2022—but this is per recipient. So as long as your gifted cars are each under $16,000 in value, you can avoid the gift tax whether you gift one car, two cars, or an entire Oprah audience full of them. This annual exclusion limit will increase to $17,000 in 2023.
As a bit of a loophole, married couples can jointly give up to $32,000 per recipient per year in 2022, which goes up to $34,000 in 2023. Gifting over this amount will leave you subject to a gift tax between 18% and 40% of the car’s value. Most gift-givers, however, can get around this by deducting the taxable amount from their lifetime gift tax exemption limit, which we’ll get to later.
Gifting the same vehicle more than once may also have an impact on your gift tax exemptions. Some states, like
Washington
, prohibit you from getting a gift tax exemption twice in a row on the same vehicle. Requirements for gifting a car
Once you’re ready to gift a vehicle, you won’t be able to just hand over the keys at your giftee’s next birthday. Your state’s Department of Motor Vehicles (DMV) requires an official
transfer of car title and registration
. The recipient must also purchase their own insurance policy for the vehicle. Here’s a general rundown of what you’ll need to do each time you gift a vehicle.
Pay off your loans
You can’t transfer a title to another driver until your loan is paid off and the lienholder has signed off on the car title. If you’re buying new or unable to pay off a loan, you may therefore want to consider getting your giftee involved with the financing instead.
Not only could a trip to a lender or dealership allow your recipient more choice in their
car loan
and model options, but co-signing with them is a great way to build up their credit. RECOMMENDED
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Fill out a bill of sale
Even though you’re not selling your vehicle, it’s important that you still document the exchange each time. In some states, this can be done by
writing your own Bill of Sale
. Other states, like Rhode Island
, require a more official Affidavit of Gift of Motor Vehicle form. Check with your local DMV to see what your specific requirements are. Your Bill of Sale should typically include the following information:
- Vehicle Identification Number (VIN)
- Signatures from the previous owner and new owner
- Date of ownership transfer
- Vehicle sale price—listed as $0
Whether or not your state requires a Bill of Sale, you’ll want to keep one on file. Doing so makes it easier to transfer your title, and can provide legal proof of the transfer of ownership in case there is any confusion in the future.
Note: If you’re
donating a car to a non-profit
, this is considered a charitable donation rather than a gift and requires different steps. Complete a title transfer
As you document the ownership exchange for your own records, you’ll also need to make it official legally by transferring the vehicle title to the new owner.
Depending on your state, this most often involves signing the back of the title and filling out a title application. The majority of DMVs provide the necessary forms on their websites, but you may also need to pick up the paperwork in person. The application will generally require basic driver’s license information from both parties along with a
current odometer reading
. Once you and your giftee have completed the title transfer application, your giftee can bring the following to the DMV:
- Completed Title and Registration Application (usually the same form)
- Proof of identity
- Signed Certificate of Title
- Sales tax exemption form (required in some states if the car’s fair market value is under $16,000 for 2022 transactions and $17,000 for 2023)
- Proof of insurance(in some states)
- Payment for title transfer, registration, and applicable gift fees
- Payment for sales tax or use tax (in certain states)
Once the title transfer is processed, a new title certificate will be issued either immediately or through the mail. In most cases,
vehicle registration
is processed in the same visit. You may also need to turn your license plates in depending on your state, in which case your giftee will receive new ones. Pay title transfer, registration, and gift fees
Every state will have title transfer and registration fees, even though the vehicle is a gift. This is technically the responsibility of your giftee, but you can always help them out here if you’re really feeling generous.
How much you end up paying varies significantly by state, with title transfer fees ranging between $4 and $165 nation-wide and registration fees ranging between $8 and $226. Keep in mind that registration fees also depend on vehicle weight in many states, which can alter your costs, as well.
Some states may charge a gift fee, like
Massachusetts
, or a license plate transfer fee—Florida
charges for both transferring plates and acquiring new plates. As a whole, Arizona tends to fall on the lower end of titling and registration costs, though Arizona car insurance costs
are still above the national average. Sales tax costs can get tricky depending on what state you’re in. In certain states, like
Texas
, your giftee may have to pay taxes if they’re not an immediate family member. Luckily, this tax is based on market value, not original purchase price. Most states, however, do not impose a sales tax on the gift recipient, as long as no outstanding taxes are due. In any case, make sure you check with your local DMV to see what taxes your giftee may be responsible for. Buy the right insurance policy
Most states require drivers to have
basic liability insurance
before they can legally drive. Some even require you to have proof of these coverages in order to successfully title and register a car. You and your gift recipient will therefore want to secure car insurance that meets their
state’s coverage minimums
before they hit the road. To navigate state coverages without breaking the bank, download Jerry
for free for an instant cross-analysis of the cheapest quotes
available to you. Is there gift tax on a gifted vehicle?
Most likely not, but it depends on your car’s fair market value and how much gift giving you’ve done in your lifetime.
Here’s a quick breakdown:
Year | Annual gift tax exemption limit (single) | Annual gift tax exemption limit (joint/married) |
|---|---|---|
2022 | $16,000 | $32,000 |
2023 | $17,000 | $34,000 |
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So what happens if you gift a vehicle with a fair market value over $16,000 in 2022? While you will need to report the gift on your taxes, there’s a good chance you won’t be paying that 18%–40% tax on the car’s value. This is thanks to the lifetime gift tax exclusion maximum, which is currently set at $12.06 million and will go up to $12.92 million in 2023.
How does the lifetime gift tax exclusion maximum work? Essentially, this is a total sum of assets you can gift over your entire lifetime without being liable for a gift tax. When you go over your annual exemption, the taxable amount can be deducted from your lifetime exemption.
For example, if a grandparent gifts their grandchild a $40,000
BMW X3
for the 2022 holidays, they will have exceeded their annual gift tax exemption by $24,000. Given that they haven’t gifted in excess of their annual limits previously, that $24,000 will be deducted from $12.06 million—leaving them $12.036 million in their lifetime exemption. Bottom Line Unless you’ve gifted over $12 million in your lifetime, it’s very unlikely that you’ll end up paying a gift tax on a gifted vehicle.
How to find cheap insurance for a gifted vehicle
Whether you’re giving away one brand new car or setting your entire family up with new wheels, gifted vehicles can take a huge financial load off other drivers. Still, ongoing expenses like maintenance, repairs, and fuel costs can’t be helped. Luckily, when it comes to
car insurance
, licensed broker Jerry
’s got your back. A
trustworthy insurance comparison app
, Jerry cross-analyzes custom quotes from over 55 top insurance companies to pinpoint the best rates available for you. Our expert agents are always a text or call away to answer any coverage questions, and they’re ready to help handle the calls and paperwork once you decide on a plan. Our gift to you? The average Jerry user saves over $800 a year on car insurance—more than enough to cover those titling and registration costs (maybe even for a few gifted cars).
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FAQs
Is it better to gift a car or sell it for $1?
It’s always better to gift a car than to sell it for $1. Not only is this the legitimate way to transfer a gifted vehicle through the DMV, but it will also save your gift recipient from paying a sales tax in most cases—and that’s on the market value, not the $1 sale.
Can you gift a car to someone out of state?
Yes! You’ll first need to transfer the title to your recipient’s name. Then your recipient will need to follow their state’s procedures to title and register an out-of-state vehicle, and purchase car insurance that meets their state’s requirements.
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