Is There Sale Tax On A Gifted Car Utah?

Have you ever received a car as a gift in Utah? If so, you may be wondering if you need to pay sales tax on it. The answer is not as straightforward as you may think. While Utah does have a sales tax, there are certain circumstances where it may not apply to a gifted car. So, let’s take a closer look at whether or not you need to pay sales tax on a gifted car in Utah.

Is There Sale Tax on a Gifted Car in Utah?

What is a Gifted Car in Utah?

When a car is given as a gift in Utah, it means that the person receiving the vehicle is not paying any money for it. This could happen when parents gift a car to their child, or when a friend or family member gives a car to someone as a present. However, just because the car is being given as a gift, it does not mean that there are no taxes or fees that need to be paid. One of the questions that people often ask is whether there is any sale tax that needs to be paid on a gifted car in Utah.

Understanding Sales Tax on Gifted Cars in Utah

In Utah, there is no gift tax on vehicles that are given as gifts. However, if the vehicle is being transferred to someone who is not an immediate family member, then the recipient of the gift will need to pay a sales tax on the fair market value of the vehicle. This means that if the car is worth $10,000, the recipient of the gift will need to pay a sales tax on this amount.

It is important to note that if the car is being gifted to a spouse, child, parent, or grandparent, then the recipient does not need to pay any sales tax. This is because these relationships are considered immediate family members under Utah law.

How to Transfer a Gifted Car in Utah

Transferring a gifted car in Utah involves a few steps. The first step is to complete the title transfer form. This form is available at the Utah Division of Motor Vehicles (DMV) website. The form must be signed by both the giver and the receiver of the car. The form must also include the make, model, year, and vehicle identification number (VIN) of the car.

Once the title transfer form is completed, the receiver of the car must take it to a DMV office in Utah, along with a copy of their driver’s license and proof of insurance. They will also need to pay the appropriate fees and taxes based on the value of the car.

Benefits of Gifting a Car in Utah

Gifting a car in Utah can have several benefits. For example, if you are looking to downsize and no longer need a car, you can gift it to a family member or friend who needs it. This can save them money and provide them with reliable transportation.

Another benefit of gifting a car in Utah is that it can help you avoid paying taxes on the vehicle. If you were to sell the car, you would need to pay taxes on the sale price. However, if you gift the car, you can avoid paying these taxes.

Gifting a Car vs Selling a Car in Utah

When deciding whether to gift a car or sell it in Utah, there are several factors to consider. If you want to avoid paying taxes on the car, gifting it is the better option. However, if you need the money from the sale of the car, then selling it is the better choice.

Another factor to consider is the relationship between the giver and receiver. If you are gifting the car to a family member or friend, then gifting it might be the better choice. However, if you are not close to the person you are giving the car to, then selling it might be the better option.

Conclusion

In conclusion, while there is no gift tax on vehicles that are given as gifts in Utah, there may be sales tax that needs to be paid depending on the relationship between the giver and the receiver. If the car is being gifted to an immediate family member, then there is no sales tax that needs to be paid. However, if the car is being gifted to someone who is not an immediate family member, then the recipient will need to pay a sales tax on the fair market value of the vehicle. It is important to follow the proper steps to transfer the gifted car to the new owner, including completing the title transfer form and paying any necessary fees and taxes.

Frequently Asked Questions

When it comes to gifting a car in Utah, there are some common questions that people have. One of the most important questions is whether or not there is a sales tax on a gifted car in Utah. Here are some answers to that question and a few others that people often have.

Question 1: Is there a sales tax on a gifted car in Utah?

In Utah, there is no sales tax on a gifted car. This means that if you receive a car as a gift from someone, you will not have to pay any sales tax on it. It is important to note, however, that if the car was purchased out of state and then brought into Utah, you may still be responsible for paying a use tax.

Use tax is a tax that is levied on items that are purchased out of state but used in Utah. If the car was purchased out of state, you will need to pay the use tax when you register the vehicle in Utah. The use tax rate in Utah is the same as the sales tax rate, which is currently 6.85%.

Question 2: Do I need to pay any other fees when I gift a car in Utah?

Yes, there are a few fees that you will need to pay when you gift a car in Utah. You will need to pay a title transfer fee, which is currently $6, and a registration fee, which varies depending on the age and weight of the vehicle. You may also need to pay a safety and emissions inspection fee, depending on the age of the vehicle.

It is important to note that if the car was purchased out of state and then brought into Utah, you may also need to pay a use tax when you register the vehicle in Utah.

Question 3: Do I need to have insurance on a gifted car in Utah?

Yes, you will need to have insurance on a gifted car in Utah. It is illegal to drive a car in Utah without insurance, so you will need to make sure that the car is insured before you drive it.

If you already have car insurance, you can usually add the new car to your policy. If you do not have insurance, you will need to purchase a policy before you can register the car in Utah.

Question 4: Do I need to have a bill of sale when I gift a car in Utah?

Technically, you do not need to have a bill of sale when you gift a car in Utah. However, it is a good idea to have one anyway, just to protect yourself in case there are any disputes or issues in the future.

A bill of sale is a document that shows that ownership of the vehicle has been transferred from one person to another. It should include the names of the buyer and the seller, the date of the sale, the make and model of the car, and the VIN number. Both the buyer and the seller should sign the bill of sale.

Question 5: Can I gift a car to someone who lives out of state?

Yes, you can gift a car to someone who lives out of state. However, if the car is going to be registered in Utah, the recipient will need to pay the appropriate fees and taxes when they register the car in Utah.

If the car is going to be registered in another state, the recipient will need to follow the registration requirements for that state. It is a good idea to check with the DMV in the recipient’s state to find out what the requirements are.

TAXES- What Are The Taxes In Utah

In conclusion, when it comes to gifting a car in Utah, it is important to understand the state’s tax laws. While there is no specific “gift tax” in Utah, the recipient of the gifted car may still be responsible for paying sales tax on the fair market value of the vehicle.

It is important to note that the amount of sales tax owed on a gifted car in Utah can vary depending on several factors, including the vehicle’s value and the relationship between the giver and receiver. Therefore, it is crucial to consult with a qualified tax professional to determine the exact amount of sales tax owed on a gifted car in Utah.

Ultimately, gifting a car can be a generous and thoughtful gesture, but it is important to understand the potential tax implications. By following Utah’s tax laws and seeking professional guidance, both the giver and receiver of the gifted car can avoid any unexpected tax liabilities.