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Gifting a car or selling it for cheap???
Posted on 3/14/24 at 8:59 am
Posted on 3/14/24 at 8:59 am
A family member wants to give a car to my daughter (under 18). I have not done this before, is it better to process the title as a gift or sell/buy it for a minimum amount of money?
What would be best for taxes, etc.
Thanks in advance.
What would be best for taxes, etc.
Thanks in advance.
9
Posted on 3/14/24 at 9:07 am to AllsGroovn
quote:
or sell/buy it for a minimum amount of money?
Also called gifting.
Posted on 3/14/24 at 9:22 am to AllsGroovn
Gonna need estimated value to answer your question.
From the good ole boys of D&D:
When choosing between gifting a car and selling it for $1, gifting it is the simpler and best option. When you sell them the car, the person who receives it will be forced to pay sales tax to the state based on the vehicle’s fair market value—which will be significantly more than the $1 you sold it for.
From the good ole boys of D&D:
When choosing between gifting a car and selling it for $1, gifting it is the simpler and best option. When you sell them the car, the person who receives it will be forced to pay sales tax to the state based on the vehicle’s fair market value—which will be significantly more than the $1 you sold it for.
This post was edited on 3/14/24 at 9:29 am
Posted on 3/14/24 at 10:12 am to AllsGroovn
Sell her the car for cheap and don't report the sale. Easy.
IRS doesn't receive any info about the sale to catch you. Sell it and move on
IRS doesn't receive any info about the sale to catch you. Sell it and move on
Posted on 3/15/24 at 7:05 am to AllsGroovn
Not me… but someone I know… has sold many cars for $3000 or less on paper. “They” asked the lady at the title transfer place if anything ever happens or red flags are raised and she said never. We see it all day everyday and I’ve never heard of anything happening.
On top of that, acts of donation happen all of the time too so no taxes are paid.
On top of that, acts of donation happen all of the time too so no taxes are paid.
Posted on 3/15/24 at 7:16 am to AllsGroovn
In our county, all sales taxes are based on fair market value (not sales price) unless there is something significantly wrong with the vehicle (i.e. it is not safe for road use).
There is no tax for a family gift. I'm not sure what the legal definition of "family" is although I'm sure there is a specific definition at the tag office.
There is no tax for a family gift. I'm not sure what the legal definition of "family" is although I'm sure there is a specific definition at the tag office.
Posted on 3/15/24 at 7:50 am to AllsGroovn
In LA, an immediate family member (father/daughter, brother/sister, etc.) can donate to another, and there will be no sales tax to register the car to the new owner/donee. (Some online sources say that there is a $15K cap on this, but I'm not sure if that is correct.) Be sure to complete the part of the form that asks for the relationship between donor and donee. Act of Donation of Movable form
If the donor is not an immediate family member, then OMV will require the new owner/donee to pay sales tax on what they determine to be fair market value. In that case, you may be better off structuring the transfer as a sale (rather than a donation) at the minimum price that you think OMV will accept. Folks often low ball it a bit, but if you present a bill of sale for what is obviously a $40,000 car and claim it sold for $5,000, they may call bullshite and tax on FMV.
If the donor is not an immediate family member, then OMV will require the new owner/donee to pay sales tax on what they determine to be fair market value. In that case, you may be better off structuring the transfer as a sale (rather than a donation) at the minimum price that you think OMV will accept. Folks often low ball it a bit, but if you present a bill of sale for what is obviously a $40,000 car and claim it sold for $5,000, they may call bullshite and tax on FMV.
Posted on 3/15/24 at 10:07 am to AllsGroovn
Have them do an act of donation, much cheaper (if any) tax-wise.
Posted on 3/15/24 at 1:07 pm to AllsGroovn
I just gifted a vehicle to my daughter in Texas. There was no sales tax. Just a $10 fee. Still had to pay for registration and license, though.
Posted on 3/16/24 at 6:56 am to AllsGroovn
(no message)
This post was edited on 3/16/24 at 7:05 am
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