Gifting a new used car to someone means you are giving that person ownership of your car without any money changing hands. The process for gifting a car to someone in the state of Texas involves transferring the car ownership title into the new owner’s name. The following steps will break down what you and the new owner need to do in order to complete that transfer.
Check the Odometer
When a car has its ownership title gifted to a new owner, the odometer reading at the time of the transfer needs to be recorded on the title. Cars that are under ten years old need to have the odometer reading recorded on an Odometer Disclosure Statement. The number of miles on the odometer at the time of the transfer will help determine the value of the gift for tax and future sale purposes.
Sign the Title
Both you and the recipient of the gifted car need to fill out the Assignment of Title section of the vehicle’s ownership title. Print your names clearly, sign, and fill in the date of the transfer.
Application for Title
The new owner of the gifted car will need to complete an Application for Texas Certificate of Title. This application will need to be filed with the other paperwork at the time of the title transfer. Should the new owner be a qualified party for the Gift Tax, be sure the appropriate box is selected on the application.
Gift Tax
The state of Texas allows a $10 Gift Tax, in place of a property value based tax assessment, when a used car is gifted to family members. Immediate family members qualified to claim the $10 Gift Tax in Texas are spouses, parents, siblings, grandparents, grandchildren, stepparents, children, and legal guardians. Charitable organizations that receive a car as a donation can also claim the $10 Gift Tax in most circumstances.
Affidavit of Motor Vehicle Gift Transfer
Along with the completed title application, odometer statement, and signed title you and the recipient of the gifted car will need to fill out and sign an Affidavit of Motor Vehicle Gift Transfer. This form indicates clearly that the previous owner and the new owner are acknowledging that no money is changing hands as a part of the title transfer.
Register the New Title
The recipient of your gifted car will need to bring all of the properly completed paperwork, proof of liability insurance, and the necessary fees to the local county tax assessor’s office in order to complete the new title. Once the paperwork is filed, the new owner can register the vehicle as their own and officially take ownership.
The process of gifting a car in Texas follows similar steps as selling the car; both involve transferring the title into a new owner’s name. Gather the proper paperwork and determine the tax obligation ahead of time to make the process even simpler.
