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

Updated on Jan 31, 2024

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

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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.

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 test drive their new car before committing.

Your recipient can sign their name directly to the new car title and vehicle registration.

You can finance the car by having them cosign 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.

MORE: Three ways to remove a co-signer from a car loan

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:

Make sure there are no remaining car liens on the certificate of title.

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

$29 Tennessee license plate 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.

MORE:

How to write a bill 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:

Bodily injury liability: $25,000 per person; $50,000 per accident

Property damage liability: $15,000 per accident

Expert tip: We recommend a robust, full-coverage insurance policy to cover the most common vehicle damages and accidents.

MORE:

Tennessee’s car insurance laws

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:

Tennessee driver’s license or other proof of identification that validates state residency

A copy of the vehicle registration

A copy of the vehicle's current Tennessee or out-of-state title

A completed Odometer Disclosure Statement (

form RV-1317001

)

A completed Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats (

form RV-f1301201

)

An Emissions Testing Certificate (if you live in one of the six counties that require a Tennessee 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!