They're useful, expensive, and practically a requirement for modern living, so it pretty much goes without saying that few gifts have as big of an impact on someone's life as that of a vehicle.
Yet, regardless of how common the transactions are, neither giving nor receiving a car is as simple as watching a title and set of keys change hands.
Title Transfers for Gifted Vehicles
When you give someone a vehicle, you must sign over the title to that person; likewise, if someone gives you a car, make sure you get the properly signed title.
Also, you might need to complete a gift form of some sort, depending on your state. Generally, these are called something like "Affidavit of Motor Vehicle Gift Transfer" (hello, Texas!).
The upshot? None of it is too terribly taxing - which reminds us, there is also the issue of use taxes on the vehicle.
Paying Taxes On Gifted Vehicles
In most states, the car's recipient must fill out the bulk of the paperwork, and this includes tax paperwork.
Whether you actually complete paperwork, provide a clerk with some information, or, well, do anything, is up to your state.
For example, in California the recipient must complete a Statement of Use Tax Exemption form - the idea here being that because the car was a gift and not a purchase, the recipient can avoid paying use tax on it. If you are a lucky devil living on the island state of Hawaii, you can take a sun-drenched drive to the register's office and they'll calculate your use tax for you. You can pay your title transfer and registration fees while you are there.
Arizona resident? You don't have to complete a tax exemption form because there are no tax exemptions.
Find out your state's policy on tax exemptions for gifted vehicles.
IRS and Vehicle Gift Deductions
Not all gifting situations will provide you a tax write-off. In fact, according to the Internal Revenue Service, "You cannot deduct the value of gifts you make, other than gifts that are deductible charitable contributions."
Learn more on donating your car to charity.
A Word on Giving Vehicles to Family
More often than not, the gift of a car is given between family members. When it goes down this way, check with your state's DMV; the procedure in which you must change vehicle ownership varies by state.
For example, in the case of California, the state waives the tax and smog test requirement between immediate family members. Same story in Hawaii where use tax is concerned.
Share your experience of giving the gift of car by commenting below.