Gifting $24,000 car to son—Gift tax exclusion

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sell it to him for market price. Loan him the money to buy it. Forgive the loan over several years.

This is how my in-laws did our down payment for a house.

Did you report the "loan" when you applied for the mortgage? I suspect you just did a gift letter.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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Anonymous wrote:

Anonymous wrote:Just give him the car. Nobody is going to come after anyone for this. Do nothing.

This. Keep it in your name OP, kid pays for insurance/etc. himself.

Don’t even have to do that…give him the car…change the title. Nobody cares. It’s not something anyone would care about unless you file the gift tax form and now get on the radar.

This. The IRS isn’t checking this kind of thing.

More really horrible advice. “Take it, you won’t get caught.” Also very unethical.

First of all, this kind of transfer of used vehicles from parent to child has been going on for generations. We did ours several times at AAA. There is no sale, just a transfer of title. There is even a box to check if it involves a family member. If you want to make things complicated for yourself, go ahead.

Most states have a form that allows the transfer of a vehicle between family members with no sales tax. This doesn't count as an ordinary gift, despite its monetary value.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just give him the car. Nobody is going to come after anyone for this. Do nothing.

This. Keep it in your name OP, kid pays for insurance/etc. himself.

Don’t even have to do that…give him the car…change the title. Nobody cares. It’s not something anyone would care about unless you file the gift tax form and now get on the radar.

This. The IRS isn’t checking this kind of thing.

More really horrible advice. “Take it, you won’t get caught.” Also very unethical.

First of all, this kind of transfer of used vehicles from parent to child has been going on for generations. We did ours several times at AAA. There is no sale, just a transfer of title. There is even a box to check if it involves a family member. If you want to make things complicated for yourself, go ahead.

Most states have a form that allows the transfer of a vehicle between family members with no sales tax. This doesn't count as an ordinary gift, despite its monetary value.

I don't think this has anything to do with federal tax issues. This is to avoid state sales taxes. It's still a gift.

[Anonymous]

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Anonymous wrote:

Anonymous wrote:I own the car now and the title is in my name alone. I plan that give it to my son later this year. I am married, but my husband is not on the title.

Assuming the car is still worth $24,000, is this gift considered within the 2x $19,000 annual gift tax exclusion? Or is it a gift just from me since my name is on the title (and my $19,000 exclusion)? I don’t want to file the gift tax form with taxes next year.

Have your son buy it for a dollar. That's what my parents did to get around this.

That doesn't get around gift tax issues. She would be gifting him $24k-$1.

Nah. No one knows the condition of a car and the value is what someone is willing to pay.

I'm obviously assuming her $24k is accurate. If the car is worth something like $10k, she wouldn't be asking.

When it comes to used cars there is no such thing as “accurate”. It all depends.

You are being pedantic or obtuse. There are accepted ways to value a car like appraisals or private party value on one of the valuation websites. Those methods will account for mileage, condition, etc. OP can't just declare the car to be worth less than $19k to make the issue go away.

Do you know if OP has done that?

OP said "assuming the car is worth $24,000," which is what I'm doing. She's gotten other advice about how to make sure it's actually worth that. IF it's worth $24k, as she asked us to assume, then the value she'd be gifting us $24k-$1. Charging $1 doesn't change the value to $1, it means you're gifting fair market value minus the dollar, as another poster explained.

It's not necessary to state the purchase price because you are saying it is a GIFT.

You are gifting something of value. The IRS says you can only do that up to $X value per year without filing a form. Of course you need to state the value.

[Anonymous]

The pearl clutching is insane. Sure, in 10 years the IRS is going to audit the OP by building a Tesla Time Machine to go back in time to properly appraise her used Honda.

[Anonymous]

I wouldn't do it for $1 but I'd definitely pick a number that would keep the paperwork simple. How about $3500?

Unless one of you wants to run for office, I would not worry about it at all.

[Anonymous]

OP here. Wow, all these responses! I reached out to my accountant (probably should have done that first). He said we can simply elect to split the gift (of the car) between my husband and me. There is a form 709 we would complete to do that. It then would be considered a gift of $12,000 from me and the same from my husband. It is below the annual gift exclusion amount so does not count against the lifetime exclusion.

This will work for us and we don’t need to add my husband to the title. I will be careful about sales tax possibilities and look into that.

[Anonymous]

Anonymous wrote:OP here. Wow, all these responses! I reached out to my accountant (probably should have done that first). He said we can simply elect to split the gift (of the car) between my husband and me. There is a form 709 we would complete to do that. It then would be considered a gift of $12,000 from me and the same from my husband. It is below the annual gift exclusion amount so does not count against the lifetime exclusion.

This will work for us and we don’t need to add my husband to the title. I will be careful about sales tax possibilities and look into that.

The “do nothing” pps for the win!

[Anonymous]

Anonymous wrote:OP here. Wow, all these responses! I reached out to my accountant (probably should have done that first). He said we can simply elect to split the gift (of the car) between my husband and me. There is a form 709 we would complete to do that. It then would be considered a gift of $12,000 from me and the same from my husband. It is below the annual gift exclusion amount so does not count against the lifetime exclusion.

This will work for us and we don’t need to add my husband to the title. I will be careful about sales tax possibilities and look into that.

Isn't Form 709 what you were trying to avoid filing in in the first place?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just give him the car. Nobody is going to come after anyone for this. Do nothing.

This. Keep it in your name OP, kid pays for insurance/etc. himself.

Don’t even have to do that…give him the car…change the title. Nobody cares. It’s not something anyone would care about unless you file the gift tax form and now get on the radar.

This. The IRS isn’t checking this kind of thing.

More really horrible advice. “Take it, you won’t get caught.” Also very unethical.

Lots of parents "sell their kids their first car for $1" and nothing unethical about it. IRS is not checking on things like that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Wow, all these responses! I reached out to my accountant (probably should have done that first). He said we can simply elect to split the gift (of the car) between my husband and me. There is a form 709 we would complete to do that. It then would be considered a gift of $12,000 from me and the same from my husband. It is below the annual gift exclusion amount so does not count against the lifetime exclusion.

This will work for us and we don’t need to add my husband to the title. I will be careful about sales tax possibilities and look into that.

Isn't Form 709 what you were trying to avoid filing in in the first place?

LOL. Let’s let it go at this point.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just give him the car. Nobody is going to come after anyone for this. Do nothing.

This. Keep it in your name OP, kid pays for insurance/etc. himself.

Don’t even have to do that…give him the car…change the title. Nobody cares. It’s not something anyone would care about unless you file the gift tax form and now get on the radar.

This. The IRS isn’t checking this kind of thing.

More really horrible advice. “Take it, you won’t get caught.” Also very unethical.

First of all, this kind of transfer of used vehicles from parent to child has been going on for generations. We did ours several times at AAA. There is no sale, just a transfer of title. There is even a box to check if it involves a family member. If you want to make things complicated for yourself, go ahead.

Yeah I don't get it. Why can't you add your son to the title now, and then later remove yourself from the title? Do you both use the car now?

This is what my dad did years ago. He paid the monthly bill. Then he removed himself from the title and it was just mine.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Wow, all these responses! I reached out to my accountant (probably should have done that first). He said we can simply elect to split the gift (of the car) between my husband and me. There is a form 709 we would complete to do that. It then would be considered a gift of $12,000 from me and the same from my husband. It is below the annual gift exclusion amount so does not count against the lifetime exclusion.

This will work for us and we don’t need to add my husband to the title. I will be careful about sales tax possibilities and look into that.

Isn't Form 709 what you were trying to avoid filing in in the first place?

OP here. I wanted to avoid it because I thought you only filed it when you exceeded the annual exemption, meaning it would count against your lifetime exemption/estate tax limit. I didn’t want that. But, a one time filing to make the gift be fully exempt under the annual limit on a fine with me.

[Anonymous]

Unless your estate is worth more than the current lifetime exclusion of $13.99M it’s unlikely you’ll pay any gift taxes. You’ll still have to file a gift tax return.

[Anonymous]

Anonymous wrote:Unless your estate is worth more than the current lifetime exclusion of $13.99M it’s unlikely you’ll pay any gift taxes. You’ll still have to file a gift tax return.

Some of us will have that issue, so it is relevant. Also, unless congress acts by 12/31/25, that $13.99M will sunset to ~$5.5M, so many more might have a problem