Surprise your family by gifting a car in California. If you plan to make your loved one or a family member happy by gifting a car in California, you should do it. And for that, Mount Shine experts will help you to know all the possible information before you execute your plan of gifting a car.
Car ownership is highly valued by Americans, as evidenced by the latest car ownership statistics in the U.S. The number of personal and commercial vehicle registrations in the U.S. increased by 3.66% between 2017 and 2021, indicating a growing trend in car ownership. As of the latest data available in 2021, 91.7% of U.S. households owned at least one vehicle, and 22.1% of households owned three or more vehicles.
So, if you are planning to gift a car to someone it’s a great idea but the only thing is you should be aware of how to do it.
Whether it is related to the vehicle title transfer process, motor vehicles act, transfer fee, documents required for smog certification, CA DMV rules, or vehicle transfer from one state to the other, we’ll help you in every way we can.
Gifting A Car In California: Is It A Good Idea ?
Suppose you are thinking of gifting a car in California to a family member. In that case, it is an excellent idea as it can help you avoid taxes and expenses related to the vehicle transfer. But remember to keep in mind that you’ll still need to pay vehicle title transfer and registration fees and complete a Statement of Facts to confirm the gift.
You also need to remember that different states hold their kind of laws and regulations. So, before you make up your mind about gifting a car, go through every possible information in detail.
Gifting A Car In California
How To Buy A Car As A Gift In California: 3 Easy Steps 
If you are gifting a car in California, there are three easy steps you need to follow:
- First, The most straightforward way to gift someone a car in California is to accompany them to the dealership so the family member who will be the new registered owner can participate in the financing and shopping process.
- Second, Make that family member a part of the car-buying process if you want to give a new car to a family member who recently received their license from the department of motor vehicles but can’t afford to pay cash without a loan.
- Third, They guarantee that your honoree gets the vehicle of their choice while avoiding any financial or legal snags. Make sure to refund any outstanding loans before transferring any car title.
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Gifting A Car To A Family Member In California 
If you think of gifting a car to a family member in California, you can pay taxes when you donate or get a car as a gift. A bill of sale gift or affidavit will save you from taxes if you reside in California and gift a car to a relative. If you are required to pay taxes on your gifted car, the state will determine your obligation based on the vehicle’s fair market value.
You must discuss the conditions of the agreement with the recipient(family member), even if you are gifting a car like a tesla and will not profit financially from the deal. Ensure they understand that they will pay for expenses like car insurance, renewal fees of car insurance, and maintenance once they become the vehicle owner.
Determine who will pay the taxes and other costs of transferring the car title. After settling those issues, you can transfer the car title to a member of your immediate family.
Make sure to have the following:
- A Duplicate title application or title transfer forms.
- A duplicate of the finished title
- Evidence of Car Insurance
- The car’s registration card
- Evidence of identity
- Payment for the transfer fees
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Difference Between Gifting A Car vs Selling For $1 in California 
There is a major difference between Gifting a car vs selling for $1 in California, and we will discuss major points related to it. Whenever you have decided to gift a car or transfer a vehicle title to one of your family members, you have to keep multiple things in mind, like
- the circumstances of the new title owner,
- car insurance, transfer ownership cost,
- their monthly income, and much more.
Yes, you will be saving taxes on it, but whether they can afford it is another question.
The CA DMV has a gift method for a reason; it’s the safest bet if you don’t intend to sell the automobile for a fair market value. In California, it’s the most legal way to transfer a car as a gift.
Now, if you are thinking of Selling for $1 in California, that has a different process and meaning to it. Selling a car for $1 means avoiding the gift tax fee and paying only the sales tax fee on the sales price.
Even if you own or want to sell a used car, you still have to transfer the original title, release ownership, and go through a smog inspection; in the case of a car loan, you have to pay off that and get a California certificate of title to complete the transfer ownership.
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3 Things You Should Know About California Car Gift Tax Exemption
Before you make up your mind to gift a car in California, there are 3 things you should know about the California car gift tax exemption, and they are:
- The federal govt imposes a gift tax, but California does not. It can also rise as high as 40%. Still, various methods exist to lower the impact.
- For the tax year 2023, you can contribute up to $16,000 to anyone without a gift tax.
- Even if you exceed the limit, you might need to file some additional paperwork during tax season. You won’t have to pay a tax until your gift, and estate tax incentives are exhausted.
How Gifting A Car In California Will Give Tax Benefits ?
In California, if you plan to gift a car to a family member, it can help you avoid taxes and expenses related to a private vehicle sale. However, you’ll need to complete a statement of facts to confirm the gift. Also, you are required to pay for a car title transfer and the registration fees.
What Are The Requirements For California Car Title Transfer 
The California vehicle title transfer process demands some paperwork and planning. The mandatory documents by the CA DMV are:
- Driver’s license
- Your vehicle identification number (VIN)
- The owner’s or lienholder’s full name and current registered owner address
- Title Document
- Car’s model and year of the vehicle
- The vehicle’s purchase date and price
- The current California title
- Signatures of the buyer, seller’s signature, and lienholder are necessary to complete a California DMV title transfer.
- Car’s reading
- Pay a transfer fee, which varies.
Also, for a CA DMV, the title transfer is essential in the following situations:
- Getting a car
- The sale of a car
- Getting a car as a gift
- Giving or donating a car title transfer to the same state or out of state vehicle title transfer.
- An automobile loan must be repaid.
Furthermore, the California DMV states that the following forms may be required:
- Car Title Replacement or Vehicle Title Transfer Application (REG 227)
- Facts and Figures (REG 256)
- Satisfied Lien/Title Holder Release (REG 166)
- Notice of Transfer and Liability Release
- Vehicle Emission System Statement (Smog) certification (REG 139)
- Gross Vehicle Weight (GVW)/Combined Gross Vehicle Weight (CGW) Declaration (REG 4008)
- Affidavit for Probate-Free Transfer (REG 5) Bill of Sale (REG 135)
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Car Title Transfer Requirements For The Car Receiver 
A car recipient must also meet certain conditions so that this will allow them to obtain the car title transferred. The vehicle will begin bearing your name upon receiving a new motor vehicle as a gift.
If the driver of the vehicle has been convicted or killed in a criminal act, a revocation order will be issued. You’ll need a lot of paperwork for this to be done like:
- Getting a death certificate,
- Confirm from CA DMV whether you have to pay the title transfer fees again or not,
- Transfer a car title to a new registered owner,
- Get duplicate vehicle title as proof,
- Transfer the vehicle ownership
- Get the process of license plate number process completed, as you will be the new owner.
You are entitled to a new name upon fulfilling all the requirements specified.
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Car Title Transfer Ownership Requirements For The Giver 
If you give a new car to the family to a friend as a gift, the car title owner must notify the California DMV Department. The vehicle must for smog inspection and be free of any unauthorized alterations or omissions in any form to get the smog certification.
If a vehicle is a two-year model or below, then the replacement vehicle title must be applied to the manufacturer.
Pro Tip: Always make sure the car purchase is legit, even if you are giving a used car. Here is how to check if a car is stolen and steps to avoid buying a stolen car.
Is A Smog Certification Required When Transferring Vehicle Title In California?
Yes, smog certification, In some cases, the transfer of the car title in the state can be required. For example, selling smog certification for vehicles will be required for sale. Accordingly, the California Department of Motor Vehicle or CA DMW website said that all vehicles never required smog inspections while transferring ownership.
How To Update Or Change A Car Title Ownership? 
Car title transfer ownership can be a little trickier in some circumstances.
A car title may occasionally be jointly owned by two people, and they both can be the legal owner. There are two possible ways to write the vehicle title transfers in this situation. It was possible to write a “or” between the two names. This usually indicates that either party may sign the document when transferring a car title.
The names might have also been written with a “and” in between them. This usually means that in order to transfer ownership, both parties must sign the title. The seller’s signature and buyer’s signatures must be attested by a notary in some states.
Check the laws in your state before signing. Also, check the laws of department of motor vehicles, what their process is and what you need to do for vehicle title transfer. If you have records of the previous owner, you can attach that too as proof of history in case of a used car title transfer.
If You Own Money On Your Car
If you owe money on your car, your lender can be in possession of the title. In this scenario, the title will generally list the name of the financial institution or lender (referred to as a “lienholder”). Ask your lender how to sell a car with a loan and how the transaction should be done by giving them a call. The lender will typically demand that you pay off the current loan in full before you can transfer the car title.
When registering the transfer of a car title, the DMV in the majority of states will demand that you attach a lender affidavit. This demonstrates that the lender is aware of the ownership change.
The car does not legally change ownership when you sign the title and hand it over to the new owner; it is important to remember this. The purchaser visits the DMV(department of motor vehicles) with the signed title. The state then provides a new title and registration in the new owner’s name. Only at this stage does the buyer have the title to the vehicle.
The seller is still liable for the vehicle until the buyer has the title transfer ownership in their name. The seller is frequently advised to go to the title office with the buyer. You can make sure the car title transfer is done legally in this manner.
Gift Vehicles in California 
It is exceptional when someone gives their car away instead of selling it. These types of gifts are typically seen in relatives either through inheritance or handouts. Vehicle ownership can be given to non-family members also. This includes specific requirements that the recipient must meet before transferring the vehicle.
In California, the definition of a family person differs from that which some countries might prefer. The California Department of Motor Vehicles, or CA DMV, defines a family member as a child spouse and includes parents, grandparents, and siblings.
The Process Of Receiving A Gifted Vehicle Ownership 
Upon receipt of your gift, you need to identify and register it. Take all the documents from the owner who was formerly a passenger and complete these:
If your inheritance includes a car, you must file a declaration to transfer a car title without a probate form. In certain cases, a lawyer can take more time to provide the necessary information. Get in touch directly with your local DMV. Pay transfer fees – Transferred title (15$ & smog transfer – $8), and you are done.
What Is The Procedure For California Title Transfer? 
If you reside in California, the process of obtaining the car title can vary. If you are interested in initiating the California car title transfer, you must provide documentation and other items as described here. Your California automobile title transfer documents are available at the California DMV offices in your area if you wish to receive them by mail or in person.
Does eTags Quickly Complete DMV Service? 
Now it is much easier to do renewals and title transfers, and everything is done all online using eTags. To ensure smooth operation, it is typically necessary to transfer the title and complete the necessary paperwork. A person must present the completed documents to the local DMV after signing your vehicle over to another party. With the right training, auto title transfers can be completed successfully using eTags.
Car Title Transfers: How To Gift A Vehicle In California To Non-Family Member?
If you gift a car to a non-family member, you must inform California DMW within 5 days. You can do this online or mail a completed Notice of Tile Transfer and Release Liability(Form REG 138).
Frequently Asked Questions
Is gifting a car to a family member in California worth it?
Yes, gifting a car to a family member in California is worth it, as in California, you can give an automobile by filling out the title and a Statement of Facts. Also, the plus point here is that it saves you from paying the tax while buying a car.
Can you gift a vehicle in California to a non-family member?
Yes, you can gift a car to a non-family member, but for that, you must inform the California DMV of the change in ownership of the vehicle within five days of the gift date if you’re giving it as a gift to a family member. You can mail the Notice of Transfer and Release Liability or complete it online from Form REG 138.
Gifting a car to a family member in another state is worth it?
The new owner must identify the vehicle’s asset value on a Statement of Facts (REG 256) form for a gift. New Section on Legal Owners/Lienholders— On the appropriate lines, write the name and address of the new legal owner, if any.
The best advice while gifting a car in California?
The best advice while gifting a car in California is:
First, the most straightforward approach to gift a car to a family member is to accompany the recipient to the dealership so that they may participate in the shopping and financing process. And second, If you want to gift a new car to someone who cannot afford to buy one outright without a loan, you should include them in the car-buying process because it will ensure that your receiver has the vehicle they choose while avoiding legal or financial complications.
Is it better to gift a car or sell for $1 in California?
If you can save money on your taxes while making someone happy, consider gifting a car in California.
How to do a California title transfer?
In California, the DMV will report all transfers of cars within 10 days. It occurs, as described earlier, if car ownership changes hands.
What to do if you don’t have a California title?
The best solution is to get a replacement California certificate for transferring the vehicle title. CA DMV(department of motor vehicles) will issue a duplicate vehicle title which you can use. If you have a lienholder release form, get it notarized. Both documents will be used as a selling process and transferring title.