Rakibul Hasan
Chief Editor of - Autos DonationRakibul Hasan, the CEO and founder of Autosdonation, is an automotive specialist with over a decade of industry experience. With a distinct mastery in car...Read more
Are you looking to surprise your friend with a car? If you live in Tennessee, you may be wondering if it’s possible to gift a car to someone else. The good news is that it is indeed possible, but there are a few things you need to know before you dive in. In this article, we’ll discuss the steps you need to take to gift a car to a friend in Tennessee and make the process as smooth as possible.
Can You Gift a Car to a Friend in Tennessee?
Giving a car as a gift is a common practice in Tennessee. It can be a generous gesture or even a way to get rid of a car you no longer need. However, before you decide to gift a car to a friend, you need to know the legal requirements and processes involved. This article will help you understand the legalities of gifting a car in Tennessee and what you need to do to ensure a smooth transfer.
Understanding the Legal Process of Gifting a Car in Tennessee
Gifting a car in Tennessee involves a legal process that requires specific documents to be completed and filed with the Tennessee Department of Revenue. The rules and regulations governing the transfer of ownership of a car are outlined in the Tennessee Code Annotated, Title 55, Chapter 3. The following are the legal requirements for gifting a car in Tennessee:
1. The person giving the car must fill out the gift section of the vehicle title certificate. This includes the name of the recipient, the date of the gift, and the relationship between the giver and the recipient.
2. The recipient must sign the title certificate and provide their driver’s license number.
3. Both parties must complete the Tennessee Department of Revenue’s Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats form.
4. The recipient must pay the appropriate fees and taxes at the time of registration.
Once these requirements are met, the transfer of ownership will be legally recognized, and the recipient will be the new owner of the vehicle.
The Benefits of Gifting a Car in Tennessee
Gifting a car to a friend in Tennessee can have several benefits. First, it can be a generous and thoughtful gesture that will be appreciated by the recipient. Second, it can be a way to get rid of a car you no longer need and avoid the hassle of selling it. Third, it can be a way to transfer ownership of a car to a family member without incurring gift tax.
When you gift a car to a friend or family member, you do not need to pay gift tax as long as the value of the car is below the annual exclusion limit, which is $15,000 as of 2021. If the value of the car is above the annual exclusion limit, you may need to pay gift tax, which can be up to 40% of the value of the gift.
Gifting a Car vs. Selling a Car
Deciding whether to gift a car or sell it can be a challenging decision. Here are some factors to consider:
1. Tax implications: When you gift a car, you may be subject to gift tax if the value of the car is above the annual exclusion limit. When you sell a car, you may be subject to capital gains tax if you sell it for more than you paid for it.
2. Relationship with the recipient: If you have a close relationship with the recipient, gifting a car may be a better option than selling it. It can be a way to show your appreciation and generosity.
3. Time and effort: Selling a car can be a time-consuming and stressful process. Gifting a car can be a quick and easy way to transfer ownership.
4. Financial considerations: If you are in a financial bind, selling a car may be the best option. On the other hand, if you have the financial resources, gifting a car can be a kind and selfless act.
The Process of Gifting a Car in Tennessee
To gift a car in Tennessee, you need to follow these steps:
1. Fill out the gift section of the vehicle title certificate.
2. Have the recipient sign the title certificate and provide their driver’s license number.
3. Complete the Tennessee Department of Revenue’s Affidavit of Non-Dealer Transfers of Motor Vehicles and Boats form.
4. Pay the appropriate fees and taxes at the time of registration.
5. Give the car to the recipient.
The Bottom Line
Gifting a car to a friend in Tennessee can be a kind and generous gesture. However, it is essential to follow the legal process and fulfill the necessary requirements to ensure a smooth transfer of ownership. By doing so, you can avoid any legal or financial complications and make the process more straightforward for both parties.
Contents
Frequently Asked Questions
Can you gift a car to a friend in Tennessee?
Yes, you can gift a car to a friend in Tennessee. However, there are certain steps that need to be followed in order to properly transfer ownership of the vehicle.
The person gifting the car needs to sign the title over to the recipient and include a gift letter stating that the car is being given as a gift. The recipient will then need to take the signed title and gift letter to the local County Clerk’s office to complete the transfer of ownership.
Do you have to pay taxes on a gifted car in Tennessee?
Yes, you do have to pay taxes on a gifted car in Tennessee. The recipient of the gift will be responsible for paying the state’s gift tax, which is 7% of the car’s fair market value. The fair market value is usually determined by the value listed in the current edition of the National Automobile Dealers Association (NADA) Official Used Car Guide.
In addition to the state’s gift tax, the recipient will also need to pay any applicable county or city taxes as well. These taxes vary depending on where the recipient lives in Tennessee.
What documents do you need to gift a car in Tennessee?
In order to gift a car in Tennessee, you will need to have the car’s original title, a gift letter stating that the car is being given as a gift, and a bill of sale, if one is available. You will also need to make sure that the car’s odometer reading is accurate and that the title has been signed over to the recipient.
Once you have all of these documents, you can take them to the local County Clerk’s office to complete the transfer of ownership.
Can you gift a car to a family member in Tennessee?
Yes, you can gift a car to a family member in Tennessee. The process for gifting a car to a family member is the same as gifting a car to a friend, with the exception that the recipient will not be responsible for paying the state’s gift tax.
In order to gift a car to a family member, you will need to sign the title over to the recipient and include a gift letter stating that the car is being given as a gift. The recipient will then need to take the signed title and gift letter to the local County Clerk’s office to complete the transfer of ownership.
What if the car has a lien on it?
If the car has a lien on it, you will need to contact the lienholder and get their permission to gift the car. Once you have their permission, you can sign the title over to the recipient and include a gift letter stating that the car is being given as a gift.
The recipient will then need to take the signed title and gift letter, along with a lien release from the lienholder, to the local County Clerk’s office to complete the transfer of ownership.
How To Gift A Vehicle To Someone Without Paying Taxes
In conclusion, gifting a car to a friend in Tennessee is definitely possible. However, it is important to follow the legal requirements set by the state. You will need to transfer the car’s title to your friend, pay any necessary taxes and fees, and ensure that your friend obtains insurance for the vehicle.
It is also important to consider the potential financial and legal implications of gifting a car. For instance, if the car is not properly maintained or insured, you may still be held liable for any accidents or damages that occur. Additionally, you may need to report the gift to the IRS if the car’s value exceeds a certain threshold.
Overall, gifting a car to a friend can be a generous and thoughtful gesture. However, it should be done with careful consideration and adherence to the laws and regulations in your state. By following the appropriate steps and seeking legal advice if necessary, you can ensure that both you and your friend are protected throughout the process.
Rakibul Hasan, the CEO and founder of Autosdonation, is an automotive specialist with over a decade of industry experience. With a distinct mastery in car donations, sponsorships, and gifting, Rakibul combines his passion for automobiles and generosity to revolutionize the car donation landscape. He established Autosdonation to facilitate the car donation and gifting process, making it more accessible and enjoyable for all involved.
More Posts