How Much Tax On A Gifted Car In Washington State?

Washington State is a place where people love to gift their loved ones with cars. However, as with most gifts, there are tax implications that need to be considered. If you’re wondering how much tax you’ll need to pay on a gifted car in Washington State, you’ve come to the right place.

In this article, we’ll take a closer look at the tax laws in Washington State and help you understand how much tax you’ll need to pay when gifting a car. Whether you’re the giver or the receiver of the car, it’s important to have a clear understanding of the tax implications to avoid any surprises down the road. So, let’s get started!

How Much Tax on a Gifted Car in Washington State?

If you’re living in Washington State and have recently received a gifted car, you may be wondering how much tax you’ll have to pay. Well, the good news is that you won’t have to pay any sales tax on a gifted car in Washington. However, there are some other taxes and fees that you should be aware of. In this article, we’ll go over everything you need to know about taxes on gifted cars in Washington State.

What taxes and fees do you have to pay when transferring ownership of a gifted car?

When you’re transferring ownership of a gifted car in Washington, there are a few fees that you’ll have to pay. First of all, you’ll need to pay a title transfer fee, which is currently $15. You’ll also need to pay a registration fee, which varies depending on the weight of the vehicle. For passenger cars, the registration fee is $30. The final fee you’ll need to pay is a $10 license plate fee.

Benefits of gifting a car

• No sales tax
• Less paperwork than selling a car
• Helps out a friend or family member in need

Disadvantages of gifting a car

• The recipient may have to pay gift tax if the car’s value is over a certain amount
• The recipient may have to pay higher insurance premiums if the car is more expensive than their current vehicle

What is gift tax, and how does it apply to gifted cars?

Gift tax is a tax that is imposed on the transfer of property from one person to another as a gift. In the state of Washington, there is no gift tax. However, if the car’s value is over a certain amount, the recipient may have to pay federal gift tax. Currently, the annual gift tax exclusion is $15,000 per person. This means that if the car’s value is less than $15,000, the recipient won’t have to pay any gift tax.

Gift tax vs. sales tax

Although there is no sales tax on gifted cars in Washington, there may be gift tax if the car’s value is over a certain amount. It’s important to keep this in mind when deciding whether to sell or gift a car.

What documents do you need to transfer ownership of a gifted car?

When transferring ownership of a gifted car in Washington, there are several documents that you’ll need to have. These include the vehicle’s title, a bill of sale, and a gift affidavit. The gift affidavit is a document that proves that the transfer of ownership is a gift and not a sale. You can obtain a gift affidavit from the Washington State Department of Licensing website.

How to fill out a gift affidavit

To fill out a gift affidavit, you’ll need to provide the following information:

1. Your full name and address

2. The recipient’s full name and address

3. The year, make, and model of the vehicle

4. The vehicle identification number (VIN)

5. The date of the gift

6. The signature of both the donor and the recipient

Conclusion

In conclusion, there is no sales tax on gifted cars in Washington State. However, there are some fees and taxes that you’ll need to pay when transferring ownership of a gifted car. These include the title transfer fee, registration fee, and license plate fee. If the car’s value is over a certain amount, the recipient may also have to pay federal gift tax. Make sure to have all the necessary documents when transferring ownership of a gifted car, including the gift affidavit.

Frequently Asked Questions

Washington State has specific laws and requirements when it comes to taxes on a gifted car. To help you understand the process better, we have compiled a list of frequently asked questions regarding the tax on gifted cars in Washington State.

Question 1: Do I Have to Pay Tax on a Gifted Car in Washington State?

Yes, you are required to pay tax on a gifted car in Washington State. The tax is based on the fair market value of the vehicle and must be paid within 15 days of receiving the car. If the car was gifted to you by a family member, you may be eligible for a family transfer exemption, which can reduce the amount of tax you owe.

It is important to note that if the car was gifted to you by someone who is not a family member, you will be responsible for paying the full amount of tax on the vehicle.

Question 2: How is the Tax on a Gifted Car Calculated in Washington State?

The tax on a gifted car in Washington State is calculated based on the fair market value of the vehicle. The fair market value is determined by the Washington State Department of Licensing (DOL) and is based on the make, model, and year of the vehicle.

The tax rate in Washington State is 6.5%, and this rate is applied to the fair market value of the car to determine the amount of tax owed. If the car was gifted to you by a family member, you may be eligible for a family transfer exemption, which can reduce the amount of tax you owe.

Question 3: How Do I Apply for the Family Transfer Exemption?

To apply for the family transfer exemption in Washington State, you must complete and submit a Gift Affidavit form to the DOL within 15 days of receiving the car. The Gift Affidavit form must include the names of the donor and recipient, the date of the gift, and the relationship between the donor and recipient.

If the DOL approves your Gift Affidavit form, you may be eligible for a family transfer exemption, which can reduce the amount of tax you owe on the gifted car. It is important to note that the family transfer exemption is only available for gifts between certain family members, such as spouses, parents, and children.

Question 4: Can I Claim a Tax Deduction for a Gifted Car in Washington State?

No, you cannot claim a tax deduction for a gifted car in Washington State. The gift of a car is not tax-deductible, and you cannot claim it as a charitable contribution on your tax return.

However, if you sell the gifted car and donate the proceeds to a qualified charity, you may be eligible to claim a tax deduction for the donation on your federal income tax return.

Question 5: What Happens If I Don’t Pay the Tax on a Gifted Car in Washington State?

If you fail to pay the tax on a gifted car in Washington State within 15 days of receiving the car, you may be subject to penalties and interest charges. The DOL may also refuse to register the car until the tax is paid in full.

If you are unsure about the amount of tax you owe or have questions about the tax on a gifted car in Washington State, it is recommended that you contact the DOL or a qualified tax professional for assistance.

#261 | Gifting in Washington State.

In conclusion, the amount of tax you will have to pay on a gifted car in Washington State depends on several factors. The value of the car, the relationship between the donor and the recipient, and the location where the vehicle will be titled and registered are all important considerations.

It’s important to remember that even if you are not required to pay tax on a gifted car, you may still need to submit documentation to the Washington State Department of Licensing to transfer the title and register the vehicle.

If you are unsure about how much tax you will need to pay on a gifted car or what steps you need to take to transfer the title and register the vehicle, it’s always a good idea to consult with a tax professional or the Washington State Department of Licensing for guidance. By doing so, you can ensure that you are following all of the necessary rules and regulations and avoiding any potential penalties or fines.