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Gifting a Car in Texas

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Brenna Swanston
· 3 min read
Gifting a car in Texas involves visiting your county tax office, notifying the Texas Department of Motor Vehicles (TXDMV), and transferring the title to your recipient. Prepare to pay around $100 in fees to complete the gift transfer.
  • Your gifted car's recipient may not have to pay a sales tax if they are an eligible family member and you’ve submitted an affidavit to your local tax office.
  • Discuss the financial obligations of car ownership with your gift recipient to determine who will pay for what before gifting a car.
  • A title transfer and a bill of sale are required to officially transfer ownership of a gifted vehicle.

How to buy a car as a gift in Texas

If you're purchasing a car with the intention to gift it, you must:
  1. Buy the new car
    as if you're buying it for yourself. 
  2. Transfer the car title to the gift recipient.
The title is yours to transfer if you pay for the new car upfront. However, you may not be able to transfer the title if there’s a
lien on the car
, as the lienholder is the technical owner of the vehicle.
Pro tip: Consider bringing the car's recipient to the dealership so they can weigh involved in the choice of car and the financing paperwork. This is the easiest way to buy a new car as a gift if you need to finance the purchase.

How to gift a used car in Texas

The easiest way to gift a car is to give away a vehicle you already own. You may have finished paying off your
car loan
or purchased the car in full upfront. 
The recipient of the gifted car may be liable to pay a
Texas sales tax
based on the vehicle’s standard presumptive value. If you’re
gifting a car to a family member
, however, they may qualify to pay Texas' $10 gift tax instead. 
The following types of family members may qualify to pay the Texas gift tax instead of a property value-based tax assessment include:
  • Spouse
  • Parent/Parent-in-law
  • Stepparent
  • Sibling
  • Grandparent/Grandparent-in-law
  • Grandchild/Grandchild-in-law
  • Child/Child-in-law
  • Stepchild
  • Legal guardian
What to do: Complete a Texas Affidavit of Motor Vehicle Gift Transfer with your eligible family member to apply for a gift tax exemption with your county tax assessor-collector.

Negotiate the terms of the gift with your recipient

Car-gifting in Texas entails the following fees: 
  • Application for Texas title: $28 to $33
  • Vehicle insurance verification: up to $31.50
  • Additional local and county fees: up to $31.50
  • Automation fee: $1 
Discuss and determine who will be liable for these fees with the person to whom you're giving the car. Your car's recipient will eventually have to pay a fee for a
Texas emissions test
as well. 
Keep in mind: Car-related expenses don't stop once the motor vehicle transfer is complete. Maintenance, insurance, gas, and parking can also add up over time.
The following table gives an idea of how gifted car expenses can quickly add up:
Fees/Additional costs
Texas Average
Title application fee/transfer fee
$28 or $33
Vehicle inspection fee
up to $30.75
Local and county fees
up to $31.50
Vehicle insurance verification fee
up to $31.50
Vehicle registration fee
$51.75
Insurance
$1,869 (liability only)
$2,308 (full coverage) per year

Record of the gift with a bill of sale

Draft a bill of sale to create a paper trail for the Texas DMV and absolve you from financial responsibility once you’ve gifted your car. This document confirms the gifted vehicle’s ownership transfer and should include the following information:
  • Date of sale/gift transfer
  • Gift value
  • Sales tax
  • Personal information for the giver and recipient
  • Signatures of the giver and recipient 

Transfer the vehicle title

The car title transfer in Texas is the most important step to gifting a car. The title transfer process for gifting a car is similar to the title transfer process for
selling a car
.
Visit your local Texas county tax office with the following documents:
Keep in mind: The car's "buyer" (or in this case, the gift recipient) is responsible for taking care of the title transfer. As the vehicle "seller," you are only required to provide the following:
  • The current car title signed over to the new owner (simply write "0" in the price section if it's a gift)
  • A current odometer reading on the vehicle title certificate
  • A signed Application for Texas Certificate of Title
  • A lien release from your lender, if applicable 

Purchase Texas liability insurance—or full coverage

Make sure your recipient purchases the
minimum required car insurance in Texas
:
Drivers who do not meet these insurance minimums can face serious fines, so make sure the recipient of the gifted car is prepared to purchase auto insurance.
“Just for state minimum liability, I was getting quotes from $70 to over $100/month until I found
Jerry
. Now my car insurance is under $30/month, or $140 for 6 months. Thank you, Jerry!” —Frank S.
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FAQs

When you gift a car, you must visit your local Texas county tax office with a completed Texas vehicle title application, a release of lien or power of attorney, and payment for required fees. You must also sign over the car title to the new owner.
If you give a car to an immediate relative, they may qualify to pay a $10 Texas gift tax. Otherwise, they might be liable to pay tax based on the car's current market value.
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