How to Transfer a Car Title to a Family Member? Follow the Ultimate Guide

The title of the vehicle must also be transferred if you intend to transfer ownership of the car, even to a family member. Below will tell you “how to transfer a car title to a family member?”

In general, you are supposed to transfer a car title to a family member by selling or gifting. Read on to find more detailed information.

What is a Title?

The document proving ownership of your vehicle is a certificate of title. For at least the last 50 years, whenever you purchase a car new from a dealership or other retailer, that retailer provides the department of motor vehicles in your state with a Manufacturer Statement of Origin (MSO). The MSO certifies that the car is brand-new, includes the VIN, and that the manufacturer is giving you, the buyer, ownership of the car.

Every time a vehicle is transferred from your ownership to a new owner in one of the 50 states, a title application must be completed.

After you submit the title application, the Department of Motor Vehicles (DMV) in your state will examine the documents and eventually send you a physical vehicle title on watermarked paper for your records. When you sell your vehicle, you’ll fill out the appropriate section of the title, and then the next buyer will use that to establish the chain of ownership, again applying for their own title, which they’ll eventually get in the mail.

Why is It Important to Transfer a Title?

A certificate of title establishes proof of ownership of a vehicle. By checking the registered owner’s information in Department of Motor Vehicles (DMV) records, it also enables law enforcement to identify who is responsible if the car is used in a crime or is involved in an accident.

You should complete the transfer of title as soon as you can, whether you’re selling, giving the car as a gift, or donating it. In this manner, the government will be aware of who is in charge and you will not be held accountable for anything that happens to the car.

Before You Transfer a Title

As a result of their relative recently receiving a license, people frequently sell or give a car to that relative. The following considerations should be kept in mind.

• To purchase the vehicle in their name, your relative must possess a license. If their license is lost or not current, they must first obtain a new one.
• At one of your local DMV offices, your relative must fill out a transfer of title application. They’ll pay the registration fee and register the car in their name at that point. They might also be responsible for paying state and local sales taxes if the transfer of ownership qualifies as a sale and you reside in a jurisdiction that levies them.
• Before transferring the title to the new owner, the DMV is likely to request proof of automobile insurance. Make sure your relative has an insurance policy before going to the DMV.
• If you don’t want to be held responsible for your relative’s driving, you should transfer the title as soon as you can because you are still held responsible until the title is transferred.

Selling Your Car to a Family Member

It’s no different from selling your car to anyone else to sell it to a family member. That means you need to follow these steps:

1. Give the vehicle a fair market value. It might be assumed that lowering the purchase price too much is an attempt to avoid paying sales tax.
2. Make use of one of our bill of sale templates tailored to your state. Verify the accuracy of all the data, including the odometer reading.
3. Title of the car should be signed. The title process can be slightly different from one state to the next. Most states mandate that both owners, along with the buyer, sign the original title transfer section if there are multiple owners listed on the title. The amount you paid for the vehicle and your mailing address might also be required, depending on your state’s requirements.
4. Deal with license plates. In most states, license plates stay with the buyer, not the car, so unless you live in California or Minnesota, you should take them off before handing over the vehicle.
5. In order to complete the formal transfer, have a member of your family bring the vehicle, the signed title, and the bill of sale to the DMV.
6. Unless you live in a state that doesn’t charge sales tax, the DMV will require them to pay sales tax on the vehicle. along with a fee to cover the cost of getting new platesand registration. This procedure is fairly simple, but if your vehicle has financing, it might be more difficult.

Can You Gift a Car to a Family Member?

Family members may give vehicles to one another, according to both Maryland and Virginia law. When a vehicle is regarded as a gift, transferring a title is accomplished similarly to when a vehicle is bought or sold. At the DMV or MVA, a vehicle title transfer must be completed by both parties.

When filling out the title, it is important to write “0” or “GIFT” in the purchase price section anytime you are gifting a vehicle. The recipient may be responsible for paying some taxes on the vehicle, including what’s called “excise tax,” which is based on the vehicle’s purchase price, mileage and age.

If the giver and recipient comply with the necessary relationship requirements specified in your state’s gift certificate form, you can frequently avoid paying excise tax. The excise tax won’t typically be applied if both parties have the same last name. For information on the requirements for giving a vehicle in your state, consult your local DMV or MVA.

Is It Better to Sell Or Gift a Car to a Family Member?

Selling and gifting each have pros and cons. Giving a car away instead of selling it may be the more appealing choice, depending on your preferences regarding compensation, the car’s value, and other factors.

Pros and Cons of Selling a Car to a Family Member

1. You might receive payment for the value of the car when you sell it to a relative. If you aren’t trying to win their favor, this might be a plus.
2. They will be responsible for paying sales tax on the vehicle when you sell it to a relative.

Pros and Cons of Gifting a Car to a Family Member

1. Giving something as a gift is a simple way to help someone out greatly while also getting rid of a car you don’t need.
2. Gift taxes may be due from the donor (further information can be found in the section above).

Do I Need a Title Notarized?

42 states allow vehicle owners to sign over the title and submit the paperwork to the local Department of Revenue or a DMV office without any supervision.

In the following eight states, do not sign the title or fill out any of the fields until you are in the presence of a notary public:

• Arizona
• Kentucky
• Louisiana
• Montana
• North Carolina
• Ohio
• Oklahoma
• Pennsylvania

If you live one of these states, you must sign your title in front of a notary, providing your driver’s license number or valid ID. The notary attests to the signature and seals the title. The majority of neighborhood banks, UPS locations, law offices, and some insurance companies all employ notaries.

Can I Avoid Paying Sales Tax If the Vehicle Transfer is from a Family Member?

Transferring a title to a family member is the same as transferring a title to anyone else in all 50 states. If the vehicle is going to be housed in another location and registered by another person, that person needs to receive a signed title filled out by the previous owner and then needs to submit it, along with an application for a new title and the requisite title transfer fee.

Whether or not states demand that family members pay sales tax is where things get interesting. The following five states do not impose sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. Every time a vehicle is sold or traded, sales tax is required to be paid in 45 additional states. Almost every state at this point collects sales tax based on some arbitrary “blue book” value, rather than on the actual purchase price you paid.

Any potential tax exemptions are subject to the regulations of your state. We’ll use Massachusetts as an example:

In the Commonwealth of Massachusetts, you can avoid paying sales tax on a vehicle if it’s transferred from one of the following:

Father/Mother
Brother/Sister
Husband/Wife
Son/Daughter

The person who is transferring the car must complete Form MVU-26, Affidavit in Support of a Claim for Exemption from Sales or Use Tax for a Motor Vehicle Transferred Within a Family. Similar ways of evading sales tax by transferring property to a member of your immediate family are available in other states.

Can You Transfer Ownership Without a Title?

Ownership cannot be transferred to someone else without a title in hand. If the vehicle you are gifting, selling or buying doesn’t have a valid title, you will need to apply for a duplicate title. It can cost anywhere from $15 to $20 to request a duplicate title.

The other title and registration fees are not waived as a result. You will still need to visit your local DMV or MVA and pay any necessary title transfer fees after receiving the duplicate title in the mail.

Do Car Dealerships Handle Title Transfers?

The buyer doesn’t have to worry about submitting the title and registration paperwork when buying a new or used car from a registered dealer like Easterns Automotive. On behalf of the buyer, the dealer should accept and deliver all paperwork to the DMV or MVA.

You will need to coordinate the title transfer directly with your neighborhood DMV or MVA office if you are transferring ownership of a vehicle you already own.

FAQs

Summary: How to Transfer a Car Title to a Family Member?

Vehicle title transfers are simple, but highly specific. States can be absurdly strict when it comes to any marks, blank spaces, missing information, or details that are entered incorrectly or improperly on a vehicle title. The Commonwealth of Massachusetts used to reject a vehicle title, for instance, if it had staple holes in it.

States usually provide warnings for filling out the title, like Kentucky’s: “Not to be used on your title: liquid paper or Wite-Out. Information on the title should not be rubbed out or scratched through. Don’t alter or erase anything.”

Always read the instructions on the title carefully before printing, signing, and filling out the odometer reading on any title transfers, whether they are to family members or anyone else.