Someone told me that if I receive a car as a gift, I still have to pay tax if the market value is over $10K..?

Question

..is that true? I live in California. I looked at all the forms and none of them mentions this, but she insists that she heard it from somewhere. Can anyone prove me right/wrong?

Answer 1

IT IS ILLEGAL TO GIVE ANYONE A GIFT OF MONEY OVER 10 K WITHOUT TELLING THE GOV , ITS STUPID

Answer 2

If sales/use tax has never been paid on the car, you would be required to pay the tax. If you can show proof of sales/use tax being collected(and it no doubt has)then you just need a statement of gift and the properly released title. An exclusion form to not pay the sales/use tax must be completed, as well. All forms should be available onlineAnytime a car is sold, sales/use tax is due, no matter if it's a used car or not.

Answer 3

No, I do not believe so (but keep in mind I'm not a lawyer or CPA).

I base this on the California DMV's web page on "Transfer a Vehicle as a Gift":
http://www.dmv.ca.gov/pubs/brochures/howto/htvr3.htm
"You Are Exempt from Paying Use Tax
Normally, use tax is due at the time of any regular transfer. However, because your vehicle was acquired as a gift, you are not charged use tax. To apply for this exemption, you must complete and submit the Statement of Facts (REG 256) with your application"

As far as the $10k, I believe you are referring to the Federal "gift tax". However, this only applies to the DONOR of the gift (not you, the recipient), and only means they have to report it on their tax return -- there is a lifetime exemption of $1 million dollars. See this page: http://www.fairmark.com/begin/gifts.htm

I would suggest you call your local DMV to confirm, but I don't see that you'd pay any taxes on this transaction, just registration and titling fees.

Answer 4

This is correct, you need to look at IRS tax code. Additionally, California will probably tax it as well. The only reason that it is over $10,000, is because a person may gift up to $10,000 a year, each year, to any person free of tax consequences.

Answer 5

Don't accept the car as a gift. Have the person write you up a bill of sale and claim you paid $100 for the car. You'll owe taxes on what you paid for the car, not what it's worth.

Answer 6

This page (http://www.dmv.org/ca-california/title-transfers.php) is all about CA title transfers including a couple sections on "gift" transfers.

Answer 7

absolutely yes. Thats why parents keep cars in their name. Gift tax is very annoying.

Answer 8

true so pay the man 10.00 to avoid the problem