Gifting a Car in Texas
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It is common in Texas to transfer ownership of a vehicle through gifting, which is frequently done among family members, friends, or organizations. When doing so, it is important to follow the legal requirements established by the Texas Department of Motor Vehicles.
This article will offer a complete guide to transferring ownership of a gifted car in Texas, which includes the necessary procedures and documentation, along with applicable fees and forms.
By the end of this article, you will have a thorough understanding of the legal process of gifting a car in Texas.
Gifting a Car in Texas: Buying a New Car
When buying a new car in Texas to give as a gift, inform the lender if the car will be financed and obtain permission from any lienholder; ensure the title is in your name; and pay any outstanding fees or taxes before transferring ownership. Following these steps will provide a legal and hassle-free transfer of ownership.
Gifting a Used Car
When gifting a used vehicle in Texas, the recipient must submit the gift transfer form, the vehicle title, proof of insurance, a valid inspection certificate, a signed application for Texas title and/or registration, and pay all associated fees.
Who Qualifies for a Gift?
The following family members are eligible to receive a gifted vehicle in Texas:
- Spouse
- Parent
- Stepparent
- Grandparent
- Child
- Stepchild
- Grandchild
- Sibling
- Step-sibling
- Half-sibling
What Steps to Take When Gifting a Car in Texas
Below are steps to take when gifting a car in Texas.
1. Confirm Your Car Ownership
Establish your ownership of the car before gifting it by confirming that the vehicle is registered in your name and checking for any lienholders.
Lienholders are entities that have a financial interest in the car, such as lenders or leasing companies. If there are any lienholders on the vehicle, the gifting process may become complicated, and you will need to work with them to transfer the title properly.
It's worth noting that legal owners are not required to pay sales taxes on gifted cars in Texas, but the recipient may have to pay certain taxes and fees related to transferring ownership.
2. Draft a Bill of Sale to Notify the Texas DMV
To gift a used vehicle in Texas, you must create a Bill of Sale to notify the Texas DMV about the transfer of ownership.
The Bill of Sale should include the buyer and seller's names and addresses, the vehicle's make, model, year, current odometer reading and Vehicle Identification Number (VIN), and the date and purchase price of the car. It's important to accurately fill out the Bill of Sale and provide a signed copy to the buyer and seller for their records.
3. Check the Odometer Reading
Checking the odometer reading is an essential step when gifting a car in Texas. When transferring ownership of a car, the law requires the seller to disclose the odometer reading, which reflects the number of miles the car has been driven.
It's important to make sure that the odometer reading is accurate and matches the car's condition.
4. Complete the Title Transfer Process
One of the crucial steps in gifting a used car is completing the vehicle title transfer process, which guarantees that the new owner is the legal owner of the vehicle. The process in Texas is similar to selling a car and necessitates several documents such as a signed and notarized title, a completed Application for Texas Title (Form 130-U), and a Texas Motor Vehicle Transfer Notification (Form VTR-346). Besides, the recipient must provide proof of insurance and pay the requisite fees and taxes at their county tax office.
5. Fill Out the Affidavit of Motor Vehicle Gift Transfer Form
The Affidavit of Motor Vehicle Gift Transfer Form includes personal information about both the donor and recipient, such as their names, addresses, and signatures, along with specific details about the vehicle, like its make, model, year, and VIN number. To complete the transfer, the donor must also transfer the vehicle's title to the recipient and obtain a notarization of the form for legal validity.
6. Get Texas Car Insurance
As a requirement, Texas car owners must maintain one final document: liability insurance with minimum coverage limits of $30,000 for each injured person, $60,000 for all injured persons, and $25,000 for property damage per accident. While uninsured/underinsured motorist coverage is not mandatory, it's a wise choice to protect oneself financially.
7. The Recipient Can Now Register Their Car
Once the recipient completes all the necessary steps, they can finally register the vehicle under their name. To do so, they will need to submit the required documentation to the DMV, including the title transfer application, the gift affidavit, the proof of insurance, and the valid inspection certificate. Additionally, they must pay all the associated fees, including title fees, and registration fees.
Keep in mind that registering a car online in Texas isn’t allowed for first-time car owners. However, other registration renewals can be carried out online, if you have no outstanding tickets to resolve.
If you’re about to register out of state vehicle in Texas, note that the car registration procedure has to be started within 30 days of arriving.
What Documents Do I Need for a Texas Vehicle Title Transfer?
For vehicle title transfers, you need the following documents:
- The current vehicle Title (Besides that, you must fill out the odometer reading on the vehicle title certificate)
- Affidavit of Motor Vehicle Gift Transfer Form
- Proof of Insurance
- Valid Inspection Certificate
- Application for Texas Title and/or Registration
- Payment of Fees
Fees Associated With Gifting a Car in Texas
- Gift Tax: There is no specific gift tax in Texas, but there might be a federal gift tax that the donor should be aware of. If the vehicle's value is more than $15,000, the donor might have to pay a federal gift tax.
- Title Transfer Fee: The title transfer fee in Texas is $33. However, if there are any liens on the vehicle, additional costs might apply.
- Sales Tax: The recipient is responsible for paying the sales tax on the vehicle, which is 6.25% of the purchase price or the standard presumptive value (SPV) of the vehicle, whichever is higher. The SPV is the average retail value based on sales of similar vehicles in Texas.
- Registration Fee: The registration fee in Texas is $51.75 for passenger cars and light trucks. However, if the county has an emissions program, it will charge an additional fee of $2.50 for the registered vehicle.
- Inspection Fee: The inspection fee in Texas is $7.
Tax Implications for Gifting a Car in Texas
When gifting a vehicle in Texas, the person receiving the car is responsible for paying a mandatory $10 gift tax, which is applicable irrespective of the vehicle's value or age. In addition, the recipient must bear all other associated taxes, such as sales tax, title fees, and registration fees.
It's important to note that if the car was previously registered in another state, a use tax may also apply. To avoid any penalties or fines, it's essential to seek the advice of a tax professional and the Texas DMV to ensure that all taxes are accurately paid.
Ensure Your Car Gifting Goes Smoothly: Use Swift-Tags Vehicle Registering and Title Services
Swift-tags is an online platform for vehicle registration and title services, fully licensed by TxDMV. The company offers convenient online vehicle registration services in Texas. As well as the title transfers. They provide an easy online process for registration renewal and also offer services for new registrations, title transfers, and personalized license plates. With its knowledgeable and friendly customer support team, Swift-tags ensures a hassle-free experience for its clients.
FAQs
1. How do I transfer a car title as a gift in Texas?
To successfully transfer a car title as a gift in Texas, the donor must transfer the title to the recipient, and the recipient must submit a vehicle title application, provide proof of insurance and a valid inspection certificate, pay all associated fees, and complete an Affidavit of Motor Vehicle Gift Transfer Form.
2. Can I give my car to my son in Texas?
Yes, you can gift your son a car in Texas.
3. How to transfer a car title to a family member in Texas online?
The process for transferring a car title to a family member in Texas online involves completing an Application for Texas Title and submitting it through the TxDMV's online portal, along with any required documentation and fees.
4. What taxes do I pay for gifting a car in Texas?
When gifting a car in Texas, the recipient must pay a gift tax of 6.25% of the vehicle's current market value, as well as any applicable local and county fees.
