Gifting a Car in Missouri vs. Selling it for $1.00?
Whether it's someone's birthday or you're simply feeling generous, gifting your vehicle to someone is a truly grand gesture. However, be prepared to jump through a surprising number of hoops to complete the process.
Legally, you need to make sure the title is transferred correctly, which might involve notarizing and filling out state-specific forms. Financially, be aware of possible gift taxes and how the car's value might affect the recipient's taxes. Plus, the recipient will need to handle costs like registration, insurance, and maybe even inspection fees. To make things even more confusing, the rules for gifting cars can vary from state to state.
Here, we'll walk you through the steps for gifting a car in Missouri and whether it's better or worse than selling it to a loved one for one dollar.
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How to Gift a Car in Missouri - Step-by-Step
Step One - Make Sure All Documents are Included With the Gift
Transferring ownership of a vehicle means much more than merely putting the keys in a gift-wrapped box. You must include:
- The vehicle's title is legally assigned to the gift recipient. When prompted to report the price, write "GIFT" instead of a number.
- A safety inspection certificate updated within the last 60 days.
- Missouri residents-including those in St. Louis, as well as Jefferson and St. Charles counties-must provide the gift recipient with an emissions inspection certificate dated within the last 60 days.
- A written statement confirming that the vehicle was, indeed, given a gift. While some Missouri residents prefer to complete an official General Affidavit (Form 768), this is unnecessary.
- If there was still an outstanding loan on the vehicle you must provide a notarized Lien Release (Form 4809), verifying that any outstanding debt on the vehicle has been paid.
Step Two - Remove Your License Plate
Step Three - Correctly Transfer the Title
Both the giver and recipient must print their names and sign the back of the title in the assignment area. Make sure to note both the odometer reading and the date.
Step Four - Declare Your Gift to the Missouri Department of Revenue
You have up to 30 days post-gift to alert the Missouri Department of Revenue by either completing a Notice of Sale or Bill of Sale document.
Follow these steps, and the gift recipient should not have to pay any state or local taxes on their new vehicle.
But What About the "Gift Tax"?
The answer to this varies from state-to-to-state, and could be subject to change. So our advice? Confirm with the Missouri Department of Revenue for the most up-to-date information. However, as of August 2024, Missouri residents do not need to pay taxes for the gifted car at the state or local level.
Federal taxes on gifting vehicles are, unfortunately, more complex than Missouri's. For 2024, the annual gift tax exclusion is $18,000, allowing a person to gift up to $18,000 (or a vehicle valued at this amount) without owing taxes on the gift. However, if the gifted car exceeds $18,000 in value, you will probably still avoid federal taxes. This is because, as of 2024, individuals can gift assets worth up to $13.61 million over their lifetime, in addition to the $18,000 annual exclusion.
Let's say you want to gift a vehicle estimated to be worth $25,000; the extra $7,000 not covered by the annual $18,000 maximum will simply be dedicated from the $13.61 million you can gift tax-free within your lifetime.
Long story short, most of us Missouri residents won't have to worry about gift taxes when giving away a car! To learn more about federal gift taxes and receive up-to-date figures, check out resources like Charles Schwab and Nerd Wallet.
What are the Benefits of Selling a Car for a Dollar in Missouri?
We've all heard the notion of selling a big ticket item (like a car) to someone for the low, low price of a dollar as an alternative to "gifting." It generally isn't the most advantageous option for Missouri residents wanting to gift their car. After all, there's no major gift tax you'll be trying to sidestep. Plus, the gift recipient may be on the hook to pay sales tax for the estimated value of the vehicle rather than the $1.00 transaction.
An Alternative: Trade-In the Vehicle for a New Purchase
Gifting your vehicle directly to a loved one is a great gift, no doubt, but it isn't the only way you can put your current vehicle toward giving them a new ride. In fact, in some cases, it may not be the recipient. Trading in your vehicle for credit that your family member or friend can put toward purchasing a new vehicle has multiple benefits, including:
- Gifting a car becomes much more complicated when there's still an outstanding loan-but it's easy to trade-in with a lien! The dealership handles the loan payoff and you get the remaining balance to put toward the new car purchase.
- You don't have to worry about doing inspections prior to gifting the vehicle. We mentioned above that you'll need to include an up-to-date safety inspection certificate with any vehicle you choose to purchase. To learn more, read our guide to car inspections in Missouri.
- The gift recipient won't have to worry about inheriting your vehicle's problems. Is your vehicle leaking antifreeze or producing a funny smell? Someone will have to pay for such fixes out of pocket, whether it's you or the recipient. Alternatively, when you trade in a vehicle, the car's issues become the dealership's problems to fix rather than your own.
- Your loved one can pick out the vehicle themselves rather than being limited to a singular option (your old car or truck). Vehicles are far from being one-size-fits all. For example, if you're thinking of gifting your college-bound teen your old pickup truck, they may find a smaller Ford SUV like an Escape is better suited for their gas budget and the tight parking spaces on campus. By trading in your vehicle and gifting them the credit, they can pick out the ride that best suits their needs.
- Your loved one can take advantage of more up-to-date technology and safety features. Let's face it-your older vehicle may not have the best-in-class technological and safety features. And perhaps it runs well today, but some of its older parts may soon be due for replacement. By granting the trade-in value of your vehicle to a loved one, you give them the freedom to combine that credit with their own money to buy an upgraded vehicle for peak performance and safety.
FAQ About Giving a Vehicle as a Gift in Missouri?
Can I give my vehicle as a gift and have the recipient pay off the remainder of the loan?
While not impossible, gifting a car for which you still have monthly payments can be challenging. For a fuller explanation of the many hurdles this could present, read Can Someone Take Over My Car Loan? Everything You Need to Know.
Can I take back a gifted vehicle after completing the above-mentioned steps?
Once you've officially completed the gifting process by following the steps detailed in this article, you have no legal claim over the vehicle. Moreover, the same vehicle cannot be gifted twice, meaning that the other person can't "gift" it back.Can I gift a vehicle to someone without a driver's license (yet)?
Yes, you can gift a vehicle to someone who does not yet have a driver's license. However, the recipient will not be able to legally drive the vehicle until they obtain a valid driver's license and insurance. Additionally, they may need a licensed driver to help with the transfer and registration process.
Want to Trade In Your Vehicle? Buy a New or Used Ride? Bo Beuckman is Missouri's Top Choice of Dealership!
At Bo Beuckman Ford, we are your premier partner for all things Ford-related! We offer extensive knowledge along with a keen focus on customer satisfaction that reflects in every interaction. Wanting to trade-in your vehicle for value to put toward another? We'll offer a fair price with minimal wait and no pressure. Want to schedule a test drive for yourself and a loved one? Our VIP offering will mean that a seasoned member of our Sales team will have whichever vehicles you've been eyeing ready to go! We welcome you to read the thousands of online reviews that consistently applaud our expertise, patience, and professionalism. So come visit us in Ellisville, conveniently close to St. Louis, Wildwood, Maryland Heights, and other Missouri communities.
By Brent FaronBrent Faron is the Sales & Fixed Operations Lead at Bo Beuckman Quality Ford, where he has worked in nearly every role since 2006 and now leads the Used Car division. He lives in Wildwood, Missouri with his wife and three kids.
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Bo Beuckman Quality Ford
15675 Manchester Road
Ellisville, MO 63011
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