Ark..Car as gift.

What occurs if I was to give a automobile with a tradein of 13000 to someone? Will the person have to pay a sales tax on the auto? Any thing to consider?

mcdye said:

What occurs if I was to give a automobile with a tradein of 13000 to someone? Will the person have to pay a sales tax on the auto? Any thing to consider?

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In most states, sales tax will have to be paid when you purchase your license plates, even if its a gift.

However, depending on who you gift it to, there may be gift tax issues as well. If its to a spouse, or a minor child who you are supporting, and its part of the child's "support", then its not a problem.

However, if you gift it to someone who is not part of your household, then you must file a gift tax return because its value is higher than 12,000. However, its still unlikely that any actual tax will be due, unless you are over your lifetime exclusion for gifting, of 1,000,000.

Just because a car has a trade in value of 13,000 does not mean that its true value is 13,000. Check the blue book wholesale value.