Giving a car to a family member can be a generous and meaningful gift. Understanding the process of transferring the vehicle title is essential to ensure a smooth and legal transition. This guide explains how to navigate the process of gifting a car to a family member, focusing on title transfers and potential excise tax exemptions, particularly within the context of Maryland regulations, while offering broadly applicable advice.
Understanding Excise Tax and Family Gifts
One of the primary concerns when gifting a car is whether excise tax will be applicable. Generally, excise tax, which is a percentage of the vehicle’s value, is levied during vehicle sales and transfers. However, many jurisdictions, including Maryland, offer exemptions for bona fide gifts between family members. This means that if you are gifting a car to an eligible family member, you may not have to pay this tax, potentially saving a significant amount of money.
To qualify as a gift and be exempt from excise tax, the transfer must genuinely be a gift, with no exchange of money, goods, or services for the vehicle. The specific family relationships that qualify for this exemption vary by location. In Maryland, these relationships are explicitly defined on the Application for Maryland Gift Certification. It’s crucial to consult this form or the equivalent in your area to confirm eligibility based on your relationship to the recipient. Even if the vehicle was previously titled in another state, it might still qualify for a gift exemption in Maryland if it was originally titled in Maryland by a family member and the familial relationship meets the state’s requirements.
It’s important to note that all parties involved in the transfer, both the giver(s) and receiver(s) if there are co-owners, must meet the relationship requirements for the gift exemption to apply fully. A notable exception exists for spouses who are co-owners. In such cases, gifting a vehicle to a parent is still considered a child-to-parent transfer, even if one spouse is not directly related to the parent. If the relationship doesn’t qualify under gift laws, the transfer will be treated as a standard sale, and excise tax will be levied on the new owner.
How to Transfer the Title of a Gifted Vehicle
To legally transfer ownership of a gifted vehicle, you’ll need to apply for a new title. The process typically involves submitting specific documents and forms to your localMotor Vehicle Administration (MVA) or Department of Motor Vehicles (DMV). In Maryland, applications can be made in person at a full-service MVA branch, by mail to the MVA’s Mail in Title Unit, or through an MVA-licensed tag and title service. These services can often assist in ensuring all paperwork is correctly completed, streamlining the process.
The required documentation generally includes:
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The Existing Vehicle Title: This is the most crucial document. For vehicles already titled in Maryland, the back of the title contains sections for “Assignment of Ownership” and “Application for Title and Registration.” The giver (current owner) must sign as the “seller,” and the receiver (family member) should sign as the “buyer.” For vehicles with out-of-state titles, ensure the title is assigned according to the issuing state’s regulations.
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Gift Certification Form: Many jurisdictions require a specific form to certify the transfer as a gift. In Maryland, this is the “Application for Maryland Gift Certification.” This form officially declares the transfer as a gift and helps verify the familial relationship for excise tax exemption.
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Proof of Family Relationship: If the last names of the giver and receiver differ, you’ll likely need to provide proof of your relationship. Acceptable documents can include a birth certificate, marriage certificate, civil union certificate, divorce decree, or adoption certificate. This documentation helps verify the eligibility for the gift exemption.
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Gift Title Transfer – Certified Statement (Form VR-299): In Maryland, this specific form is required only when an aunt or uncle, aged 65 or older, gifts a vehicle to a niece or nephew. If the aunt or uncle is younger than 65, the transfer may not be considered a gift for tax purposes. Always check for state-specific forms like VR-299 if applicable to your situation.
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Lien Release (if applicable): If the vehicle title indicates an existing lien (loan), you must provide proof that the lien has been officially released. This could be a Maryland Security Interest Filing (SIF) form or a signed letter from the lienholder identifying the vehicle and confirming the lien release. You cannot transfer a title with an active lien without the lienholder’s consent.
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Maryland Safety Inspection Certificate (if applicable): If you plan to register the vehicle in Maryland (which is usually the case), a safety inspection certificate is generally required. However, an inspection might be waived if the vehicle is gifted within the immediate family (parent, child, or spouse) and the vehicle meets current registration requirements related to safety inspections. Always verify the current inspection requirements and exemptions with the MVA.
After submitting all required documents and paying any applicable title transfer fees (note that gift transfers often have reduced fees compared to sales), your new title will be mailed to you. If you also register the vehicle at the time of application, you might receive your registration card, license plates, and expiration stickers immediately if applying in person. Otherwise, these items will also be mailed to you.
Key Considerations and Contact Information
Remember to always verify the specific requirements and acceptable documentation with your local MVA or DMV, as regulations can vary by jurisdiction and may change. Paying close attention to detail and ensuring all forms are correctly completed will help avoid delays and ensure a smooth title transfer process when gifting a car to a family member.
For specific questions regarding Maryland title transfers, you can contact the Maryland MVA Mail in Title Unit at:
MVAMail in Title Unit
6601 Ritchie Highway, NE
Glen Burnie, MD 21062
For telephone inquiries, contact the MVA Customer Service Center: 1-410-768-7000
TTY/Hearing Impaired: 1-301-729-4563
