For tax year 2024, gift tax rules apply if the vehicle's fair market value is over $18,000. Gifts exceeding the $18,000 annual exclusion count against your lifetime exclusion, which currently is $13.61 million.
You're minutes away from saving on your car loan. Gifting a car is a better option than selling it for $1 in California, since vehicles given as gifts aren't subject to taxes.
Gifting is usually simpler and avoids potential issues with sales tax. Since the car is already in your possession and you both are family members, this process is straightforward and likely the least expensive.
“There may be insurance issues if a parent doesn't formally transfer ownership of a vehicle to a grown child no longer living in the family home.”
According to Carbrain, you may or may not have to pay taxes when you give or receive a car as a gift. It all depends on what state you live in. California residents who are gifted a vehicle can apply for a tax exemption at the Department of Motor vehicles.
To gift someone a vehicle, you must transfer the vehicle title to their name and create a bill of sale. Selling a vehicle for $1 instead of gifting it could result in your recipient paying sales tax based on the car's fair market value — it's better to stick with the official gifting process.
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.
The primary fee for a title transfer is $15. If the transfer involves a smog check, the fee may increase based on the test results and any repairs needed. Additional costs can include: Use Tax: Typically 7.25% of the vehicle's sale price, or the current market value if it's a gift or inheritance.
Unless you know if the charity plans to sell or keep your vehicle, and you feel certain of its fair market value, selling it instead of donating it might be a better option to maximize your financial gain.
General Affidavit Form (DOR-768)
Note that some require notarization of the applicant's signature.
Bottom Line. California doesn't enforce a gift tax, but you may owe a federal one. However, you can give up to $19,000 in cash or property during the 2025 tax year and up to $18,000 in the 2024 tax year without triggering a gift tax return.
If you want to give hefty gifts to your loved ones without worrying about paying a gift tax, you should give something that doesn't exceed the annual credit of $18,000. The good news is that the limit is set per person, and you can pay the same amount to another person in the same year without filing the return.
Gifts to individuals are not tax-deductible. Tax-deductible gifts only apply to contributions you make to qualified organizations. Depending on how much money you are gifting to your adult child, you may have to pay a federal gift tax.
If you're still a dependent of your parents and they're paying for your higher education--room and board for example--this isn't considered a gift. A transfer of $100,000 to you directly is considered a gift and may be taxable to the giver.
You must transfer the California title and register the gifted vehicle in your name. You have 10 days to do so. You need the documents listed above that the gifter will hand over. This included the original title, the smog certification proof if it applies to you and odometer mileage.
How long can you drive a deceased person's car? It depends on your unique situation and the laws within your state, but there is usually a 30-day grace period before you would need to have proper registration.
If your teen driver will assume all responsibility for the vehicle and it is no longer your responsibility, he or she should own it. Further, whatever you list for ownership at the DMV should carry over to your auto insurance plan. And, no matter who owns the vehicle, be sure to be honest about the usage of it.
Yes, the name on a car title can impact insurance coverage. Insurance companies usually require the policyholder to have an insurable interest in the vehicle, meaning they either own the car or have a significant financial interest in it.
For a titled vehicle, an owner can designate a beneficiary on the title. This is done with a form provided by the state licensing agency. The process is essentially the same as with a POD or TOD account.