Gifting a Car in Tennessee
Gifted cars are exempt from state taxes in Tennessee as long as you submit an Affidavit of Non-Dealer Transfers of Motor Vehicles with your $14 title transfer.
Written by Amber Reed
Edited by Pat Roache
Table of Contents
- How to buy a car to give as a gift in Tennessee
- How to gift a used car in Tennessee
- Step 1: Negotiate terms with the recipient
- Step 2: Record the gift with a bill of sale
- Step 3: Purchase Tennessee car insurance
- Step 4: Complete a title transfer at a TVS office
Load full table of contents
To
gift a vehicle
in Tennessee
, you’ll need to complete a $14 title transfer at your local Tennessee Vehicle Services Division (TVS) and submit an Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats to receive exemption from the state vehicle sales tax.
- It’s best to involve your recipient in the car-buying and financing process if you plan on buying a new car as a gift in Tennessee.
- You can gift a used car once it’s been released of any liens by heading to the TVS office with your recipient and completing a Tennessee vehicle title transfer.
- Your gift recipient may also be responsible for a $29 flicense plate fee and purchasing car insurance per Tennessee’s minimum liability requirements.
- It’s best to involve your recipient in the car-buying and financing process if you plan on buying a new car as a gift in Tennessee.
- You can gift a used car once it’s been released of any liens by heading to the TVS office with your recipient and completing a Tennessee vehicle title transfer.
- Your gift recipient may also be responsible for a $29 flicense plate fee and purchasingcar insuranceper Tennessee’s minimum liability requirements.
How to buy a car to give as a gift in Tennessee
Before you get started: You can’t transfer a vehicle title to a new owner while there’s an outstanding
car loan
on the vehicle unless you’ve involved your recipient in the financing agreements.Involving your gift recipient in the car-buying process when you
purchase a brand new vehicle
as a gift in the state of Tennessee has the following advantages:- Your recipient can sign their name directly to the new car title and vehicle registration.
- You can finance the car by having themcosign the loan, while you take the responsibility of paying it off.
If you want the gift to be a complete surprise: Your only option is to pay for the car in full under your own name. You can
transfer the car title
to the gift recipient for a $14.00 transfer fee as soon as your dealership mails your completed paperwork to the County Clerk’s office.How to gift a used car in Tennessee
Gifting a used vehicle is cheaper than gifting brand-new one, but there are a few additional steps:
- Submit an Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats (form RV-F1301201) to the Tennessee Department of Revenue for tax exemption.
- Complete the Tennessee title transfer at your local TVS office for a $14 fee, listing the sales price as $0.
Step 1: Negotiate terms with the recipient
Decide with your gift recipient who will be responsible for the fees involved with a gifted vehicle. These typically include the following:
- $14 title transfer fee
Sales tax exemption: You won’t have to pay the
Tennessee car sales tax
as long as you submit the Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats (form RV-F1301201
). However, you’ll need to pay a federal gift tax with the IRS if you’re gifting a brand new vehicle with a market value of $17,000 or more.Once you’ve discussed those fees with your recipient, you should also make sure they’re aware of the long-term expenses related to car ownership such as
repair and maintenance
fees, fuel costs, and car insurance
. Step 2: Record the gift with a bill of sale
A
bill of sale
isn’t legally required in Tennessee, but it’s a good idea to have one on file in case there are any legal or financial disputes over the gifted vehicle.What to do: Make sure your bill of sale contains the following important information:
- Description of the gifted car
- The Vehicle Identification Number (VIN)
- A statement of sale with the purchase price of the car lifted as $0
- Names of the seller and buyer
- The date of sale.
Step 3: Purchase Tennessee car insurance
Your gift recipient will need to purchase Tennessee auto insurance to legally own and drive their new car. At a minimum, they’ll need the following amounts of
liability car insurance
:Expert tip: We recommend a robust,
full-coverage insurance
policy to cover the most common vehicle damages and accidents.Step 4: Complete a title transfer at a TVS office
The transfer of tile legally grants ownership to the recipient of your vehicle.
What to do: Both you and the gift recipient should head to your local TVS office to fill out the Tennessee vehicle title application forms and sign the certificate of title. You’ll need to pay a $14 transfer fee and $29 license plate fee.
Bring the following required documents to complete the title transfer process:
- A copy of the vehicle registration
- A copy of the vehicle's current Tennessee or out-of-state title
- An Emissions Testing Certificate (if you live in one of the six counties that require aTennessee car inspection)
Once the car title transfer is done, you have legally completed the transfer of ownership from the previous owner to the gift recipient—your gift giving is complete!
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Do you have to pay taxes on a gifted car in Tennessee?
You do not have to pay sales tax on a gifted car in Tennessee if you submit an Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats (
form RV-F1301201
), but you might have to pay the federal gift tax if the market value of the vehicle exceeds $17,000.Is it better to gift a car or sell it for $1 in Tennessee?
The state of Tennessee makes the process of gifting a car simple, so it’s better to gift a car than sell it for $1.
Can you gift a car to a family member in Tennessee?
Yes, you can gift a car to a family member in Tennessee. The Volunteer State allows any individual to gift a car to any other individual.
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