My friend (not a relative) is giving me her 2018 Rav4, valued at maybe $13,000. She lives in Texas, I live in D.C. I am visiting her to get the car and then driving it home.
What paperwork do we need to complete at the time? Would I pay less in Taxes if I "pay" say $5000 (less than the car's value)? And what else do I need to do when I file taxes?
Paperwork for gifted car
byu/Middle-Government-95 inpersonalfinance
Posted by Middle-Government-95
4 Comments
My MIL gifted us her car, we wrote ‘gift’ for the sale price on the title as per the instructions found online (in NJ). The clerk did ask me if I owed her any money on the car, I said no, and that was that.
You take the signed title.
You bring signed title to your DMV in DC and register it.
Does not matter what you “pay” for it since DC charges tax based on the fair market value. In other words, you’re not the first to think of scheming how to avoid taxes.
There is nothing to do when you “file taxes” if you are referring to your income tax return (the thing due April every year).
Don’t write any amount. you’ll be charged sales tax if applicable when you go to register the car. When your friend fills out the title to transfer it to you have them write zero dollars in the amount section. The car value is likely under the gift tax reporting amount therefore they do not have to report the gift to the IRS. FYI, not a CPA you should confirm with a CPA for taxes.
In texas we have form 130u, make sure dc doesnt have something similar and id they do get that signed in addition to the title