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Gifting a Car in California

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Gifting a car in
California
can help you waive taxes and fees associated with a private vehicle sale—but you’ll still need to pay title transfer and registration fees and fill out a Statement of Facts to certify that it’s a gift.
  • To gift a car in California, a title transfer is necessary to transfer ownership of the vehicle.
  • Gifted cars aren’t subject to sales tax in California, but the standard title transfer and registration fees still apply.

How to buy a car as a gift in California

The simplest way to give a new car as a gift is to bring the recipient with you to the dealership so that they can be involved in the car buying process. 
Why it matters: This ensures that your recipient gets the car they want while avoiding any legal and financial snafus.
What to expect: While covering the cost of the vehicle purchase is a no-brainer, you’ll need to decide whether you want to cover other costs associated with your gift, such as vehicle registration, car loan costs, and smog inspection fees. 
Key Takeaway You’ll need the title in hand before you can give a car as a gift—so if you’re trying to gift a new car, bringing your giftee to the dealership might be the best move. 

How to gift a used car in California

If you’re set on the big driveway reveal, the best way to gift a car is to transfer a vehicle you already own to your new recipient. Just make sure that there are no outstanding loans or
liens
on your gifted vehicle before you start the title transfer process. 
If your gift is more about helping out a loved one and offloading a car you’re not using than creating a big moment, you’ll need to follow the same steps. Here’s what you’ll need to do to legally gift a used car in California.

1. Negotiate the terms of the gift with your recipient

Once the excitement dies down, sit down with your intended recipient to reach an agreement about the gift. Even as a gift, a vehicle title transfer involves fees, and car ownership comes with regular costs.
In California, a title transfer requires two fees:
  • Transfer fee: $15
  • Smog transfer fee: $8
  • Total: $23
You can use this
fee calculator
from the California Department of Motor Vehicles to estimate any other possible fees associated with the vehicle gift.  
Discuss who’s going to pay for the title transfer as well as for car maintenance, insurance, fuel, and any other expenses associated with the car. You don’t want to give the gift of an unexpected financial burden along with the car.
Here’s a table of the costs you should discuss with your recipient. 
Cost
California state average
Title fee
$23
Registration fee
$64
Car insurance
$1,869 (liability only) to $2,344 (full coverage) per year
Fuel 
$1,500 to $2,500 per year

2. Record the gift with a bill of sale

Even if there’s no money changing hands, a California bill of sale acts as a legal record of your transaction. Having a copy in your record could protect you from legal consequences down the line.
Both you and the new owner should sign the bill of sale, certifying that you agreed to the terms of the gift.

3. Transfer the vehicle title

The single most important step in the car gifting process is the
transfer of the car’s title
. That’s what officially transfers ownership of a vehicle to a new legal owner. 
You and your recipient should fill out and sign the California certificate of title, or an
Application for Replacement or Transfer of Title (REG-227)
for a new title if you don’t have the original title. Be sure to: 
  • Indicate in the appropriate box that the car is being transferred as a gift 
  • Complete an
    odometer disclosure
    if the vehicle is less than 10 years old
  • Obtain a lienholder’s release, if necessary
You’ll also need to fill out a
Statement of Facts (REG-256)
for tax exemption. In California, any vehicle transfer between family members (parents, children, grandparents, grandchildren, spouses, domestic partners, and minor siblings) is tax-exempt. 
Once you’ve met all the title transfer requirements, bring it in person along with your
fees
and driver’s license to the nearest California DMV office. You’ll be able to register the car there. 
Don’t delay: It’s important to complete the title transfer and registration process within 10 days of the gift.

4. Purchase California liability insurance—or full coverage

Whether you’re footing the bill or leaving it up to your recipient, make sure that the gifted car is covered with a
valid California car insurance policy
. That should include at least the following minimum coverage amounts: 
However, for new cars (under 10 model years old), it’s a good idea to carry at least $100,000/$300,000/$100,000 of liability insurance along with
full coverage insurance
—that is, collision coverage and comprehensive coverage. 
MORE: Penalties for driving without insurance in California

5. Complete a notice of transfer and release of liability

Within 5 days of the gift, you should complete a
Notice of Transfer and Release of Liability
(Form REG 138). Keep a copy of this document for your records. 
To get started, you’ll need: 
  • The new registered owner’s name and address
  • The vehicle’s license plate number
  • The last five digits of the vehicle identification number (VIN)
  • A valid odometer reading as of the transfer date
  • A printer to print and keep a copy of the form 
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FAQs

No! Under California law, you’re not required to pay use tax or sales tax on a vehicle you receive as a gift.
The DMV has a gift process for a reason—it’s the most legitimate way to transfer a car as a gift in California, and the safest bet if you’re not planning to sell the car for a fair market price.
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