If I gift a car 2 my dad meaning sign over the title to my dad for a car I own, does he owe capital gains tax?

Question

I have an older car I wanted to give my dad for free. I went to the DMV and put gift on the title and gave it to my dad to sign. Now the title is only in his name. Does this mean he'll owe some tax at the end of the year to IRS for capital gains tax?

I'd also want to add that I make no plans to claim the gift as a write off in my own taxes. I want to make sure he owes nothing for this car he received.

Answer 1

Well, it's a good thing that you don't intend to try to "write off" the gift. That is not allowed.

Even if the value of the car is greater than $12,000, you would likely not have to pay a gift tax. For gifts to any one person in any one year, the value of the gifts greater than $12,000 is reportable to the IRS (reportable gifts). However, the tax code gives you a credit for the tax due on the first $1M of reportable gifts that you make in your lifetime.

A potential capital gain would only occur when and if the car is sold. Your father's cost basis for the car would be the same as your's - whatever you paid for the car. Theoretically, there could be a gain if the car appreciated in value, and it was sold for greater than the cost basis. But that is a remote possibility. Most personal use assets depreciate in value over time.

Answer 2

A gift tax is imposed on the person giving the gift, never on the person receiving the gift. So, no your dad would not owe any taxes on the value of the car.
You are allowed o give your Dad or anyone else you want $12,000 per year without your having to file a gift tax return. Assuming the car was worth less than $12,000 when your gifted it to your Dad you will also not have any tax due on the transfer.

Answer 3

no,

unless it is a really expensive car with a lot of value.

Over $11,000; and frankly, very few USED cars are worth 11K (especially if you look at blue book for trade in value http://www.kbb.com/)

if it is over 11,000 then you will owe for a gift tax, not a capitol gains.

http://www.irs.gov/newsroom/article/0,,id=107815,00.html

as far as state taxes, each state is different but MOST states charge the tax at the time of title transfer and since you already transfered it you have paid the tax. most states don't charge to transfer between family members

If your dad BOUGHT the car from you, it would not be a gift and no taxes would need to be paid; since it is your car you can charge him any amount per a month for as long as you want. It could take him 10 years to pay it off; that is between you and your dad.

if you ares still not sure, call a local CPA and ask the question.

Jewells

Answer 4

No capital gains tax since he did not sell it for a gain. You as the donor need to file a Form 709 gift tax return if value was over 12,000 which is doubtful - and most people don't bother anyway.

Answer 5

the recent criminal proprietor could be the closest residing relative. this could be your mom in the event that they have been married. If not then it would pass to the oldes baby. while you at the instant are not the oldes you will discover if your older sibling is fascinated in the vehicle or not. All you will desire is the loss of existence certificates and your delivery certificates to coach you have been appropriate. in case you would be making use of you will could get insurance and pay for the charges on the dmv. you may pass to the dmv for whereever you reside, yet you will desire the present identify even whether it truly is from yet another state. desire this facilitates!!

Answer 6

Yes, and, you may be responsible for the gift tax.

Answer 7

Depends on the monetary equivalent.