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Gifting a car in Colorado may help you avoid expenses that come with private car sales, like sales tax. You’ll still need to transfer the car’s title and properly register the car as a gift.

Gifting a car in Colorado is fairly straightforward, but it's recommended to bring the recipient to the dealership and include them in the process.
Whether you’re gifting a new car or a used vehicle, follow the same process of negotiating terms and writing a bill of sale.
Complete the title transfer and registration process at the local Division of Motor Vehicles (DMV) office.
Factor in the car’s future costs, like fuel, maintenance, and
Colorado car insurance
.

How to buy a car as a gift in Colorado

If you’re planning on buying a brand-new car to gift someone, you may want to skip the big driveway reveal. The best way to gift someone a new car is to bring them with you to the dealership and include them in the purchase process.

This is because the gift recipient won’t receive the car title until all car loans are paid and liens on the car are removed. If you’re not in possession of the car’s title, your giftee will need to take over the loan.

This isn’t an issue if you can pay for the car outright—but if you’re financing, you’ll want to include the recipient in this process to work out a payment plan.

Brand-new cars are a huge financial investment, so including the gift recipient also ensures they’re getting exactly what they want.

Key Takeaway: You can’t gift a car to someone without the title in hand. To avoid financial complications, bring the giftee with you to the dealership.

How to gift a used car in Colorado

If you’d like to wow your giftee with a surprise car, the best way to do it is to gift a car you already own. This could be a new or used car you’ve bought in full up-front, or even a car you’ve owned for a while and would like to give to a loved one.

Whether the gift is a surprise, you’ll have to follow the process of transferring a vehicle title to a family member to properly gift a car in Colorado.

Negotiate the terms of the gift with your recipient

Gifting a car is more complicated than gifting items like clothing or useful appliances, so you’ll need to negotiate the terms of the gifted car with your giftee once the excitement dies down.

Even though the car is a gift, it still comes with costs, like title fees, Colorado vehicle registration, and auto insurance, that someone (either you or the giftee) will have to pay.

You don’t want to give the gift of an unexpected financial burden along with the vehicle! Here are some of the costs you should discuss with your recipient:

Cost	Colorado average
Title transfer	$7.20
Registration fee	$45-$90+
Insurance	$1,633 (liability only), $2,308 (full coverage) per year
Maintenance	$1,186 per year
Fuel	$1,837 per year

Record of the gift with a bill of sale

You may wonder why you should record the gift with a bill of sale.

Creating a Colorado bill of sale for your gift acts as proof that ownership has been transferred to the giftee and that you’re no longer responsible for the car. Having a copy in your record could protect you from legal consequences down the line.

Both you and your recipient should sign the bill of sale, certifying that you agreed to the terms of the gift.

Transfer the vehicle title

The giftee has 60 days to register their vehicle at the Division of Motor Vehicles (DMV). You’ll need to endorse the title so that they can complete this process.

Bring the following documents and information to your local motor vehicle office to complete the title transfer process:

The original title: You’ll need your original Colorado title, out-of-state title, or a certified duplicate title to begin the title transfer process in Colorado.

Odometer reading: You’ll need to record the car’s odometer reading in the Odometer Reading box on the

title application form

if the car is less than 20 years old.

Your printed name and signature: Clearly print your name exactly as it appears on your current title and sign in the Seller’s Signature box.

The giftee’s printed name: The giftee must print their name exactly as they’d like it to appear on their new title. If you had to report the odometer reading, the giftee must also sign acknowledging they’re aware of the reading.

Date of sale and purchase price: Fill out the date in the appropriate box and write “gift” in the purchase price box to transfer your vehicle title as a gift.

Existing loans: If there are any loans on the vehicle, the lender will have to sign off on the title application form. The loan will be transferred to the giftee if the title application is successful.

Once you’ve endorsed the title using the title application form, you’re ready to head to your local DMV and register the gifted vehicle. Here’s a complete checklist of additional information and documents you’ll need for vehicle registration:

New owner identification or designated power of attorney: Use this

list of acceptable secure and verifiable identification

to determine which ID to bring to register the car in the state of Colorado.

Vehicle title and title application form: You’ll have to present the current certificate of title and prove you’ve endorsed the title with the title application form.

Emissions test: You’ll have to put the gifted car through an emissions test and present the test results at the DMV

if your county requires one

Odometer reading: You’ll have to present a current and accurate odometer reading when registering the car if it’s less than 10 years old.

Proof of insurance coverage: You’ll need to show proof that you have an

auto insurance

policy that meets Colorado's minimum insurance requirements.

Vehicle identification number (VIN) verification: If the car is from out of state, you must complete a VIN verification using a Verification of Vehicle Identification Number form.

License plates: Colorado State Law requires you to keep your own plates, so your giftee will need new ones. The giftee can obtain a temporary Colorado tag until they have new plates.

After you’ve presented all of the above documents to your local DMV office, it’s time to pay fees associated with title transfer and registration.

You’re exempt from sales tax if the giftee is an immediate family member and the car was gifted freely. If there is a loan on the vehicle, though, you’ll be subject to tax.

Review: Once you’ve endorsed the car title, bring the required documents to your local Colorado DMV to transfer the title and register the car under the giftee. You’ll be exempt from sales tax if you give the car to an immediate family member.

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FAQs

Do you have to pay tax on a gifted car in Colorado?

If you’re gifting a car to an immediate family member in Colorado, you’ll generally be exempt from paying tax on the gifted car. You may have to pay taxes if the giftee isn't an immediate family member.

Is it better to gift a car or to sell it for $1 in Colorado?

The Colorado DMV has a gift process for a reason. Following this process is the best way to transfer a car as a gift rather than selling it for a fair market price.