Louisiana may not see snow as consistently each winter as other states do, but one thing we do see an awful lot of is car commercials advertising winter sales events. While a brand-new car is a gift many of us would be thrilled to give to our loved ones this holiday season, it’s usually not in the budget. However, it’s not unusual to give an older car to a loved one who needs it, any time of year.
If you are considering gifting a vehicle to a friend or family member, here’s what you need to know.
Can They Afford It?
This is the most important question you need to ask before deciding to gift someone a car. If the person you want to give the car to only needs help getting the money together for the purchase, then that’s great! It will be a gift they will surely appreciate. However, if the person you want to give the car to is not in a good financial place to afford monthly insurance payments or gas, then buying them a car may do more harm than good.
Gifting Your Old Car
If you are planning to gift someone a car you currently own, you need to locate the title. If you are still making payments, then the loan company will have the title and you will need to pay off the loan before receiving it.
If you purchased your car outright or finished paying off your loan and can’t locate the title, you can request a duplicate copy from your local OMV, although you will need to pay a replacement fee.
Transferring the Title
The person gifting the car will need to fill out the seller’s portion of the transfer section on the back of the title, and the person receiving the gifted car will need to fill out the buyer’s portion. In the field where it asks for the sales price, you may simply fill in “gift.” In Louisiana, you will also need to:
- Get a lien release (if necessary)
- Get the gifter’s signature on the title notarized
- Complete a Vehicle Application form
- Complete and notarize an Act of Donation of a Movable form
- Complete an Odometer Disclosure Statement, if the vehicle is less than 10 years old
- Complete the online Notice of Transfer on the OMV website
- Pay a title transfer fee and handling fee
- Register the car in the recipient’s name
Buying a Car as a Gift
If you are buying either a new or used car to gift to someone, you will have four main options.
- Purchase the vehicle outright and follow the steps outlined above.
- Take out a loan in your own name but register the title under both your name and the gift recipient’s name.
- Bring the gift recipient with you to the dealership, gift the down payment, and have the gift recipient finance the vehicle themselves.
- Bring the gift recipient with you to the dealership and co-sign the loan.
Make sure the person you are gifting the car to purchases auto insurance. They will not be able to legally drive or register the car in their name without showing proof of insurance.
Gifting a Vehicle to Someone in Another State
Title-transfer requirements can vary from state to state. If you are unsure whether to follow the requirements for Louisiana or for the state the person you wish to give the car to lives in, always follow the rules of the state the car will be registered in.
How Gifting a Car Affect Your Taxes
In the majority of cases, gifting a car will not affect your taxes for better or worse.
Unless you are gifting a car to a charity or religious organization, you will not be able to get a tax deduction for gifting your car. You may be charged taxes on large gifts, but this federal “gift tax” only applies if the value of the car you want to gift is more than $15,000. If the car is worth more than $15,000, the giver will be required to pay gift tax and the recipient may be required to pay a tax on the gifted car.
When You Have Questions After a Car Accident, Call Dudley DeBosier
If you or a loved one have been injured in a car accident that totaled your car and left you unable to work, you shouldn’t need to depend on the goodwill of others to help you get back on your feet. Our team of Louisiana car accident attorneys help injury victims get the money they need after car accidents caused by others’ negligence, and we aren’t afraid to take your claim to court if the insurance companies try to reduce your benefits or deny you compensation. Call today for a free consultation.
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