SSI Recipient gifting a vehicle

[rp782011]

What is the name of your state? Ohio

My sister is on SSI and owns her own vehicle. It's a 1999 Honda Accord. As the vehicle is her daily driver the car does not count as a resource toward her income limit. What I would like to know is if it's possible for her to gift the car to a relative while not impacting her SSI eligibility. My local SSA office can't give me a straight answer on this issue.

The woman at the office told me that she is not allowed to gift anything and that to transfer ownership of the vehicle from herself to a relative it would require her to officially sell it and count the money as income.

I don't understand why she can't gift the vehicle. It isn't being counted as a resource now and everyone is allowed to gift up to $X per year without it being counted as taxable income per the IRS.

The car's value is below $2,000. Is it true she can't gift it? Does she have to sell it at Kelley Blue Book Value? The car is nearly 20 years old with 180K miles on it. The KBB value is roughly $1,500 but I doubt I could get anyone to buy this beat up thing for more than $300.

Regardless of how we rid the car from her I would then like to gift her my car. This part I believe I understand: I'm allowed to gift her my car as long as she retains it for at least 30 days and it is her daily driver. No problem there. She's going to use it as her daily driver for as long as possible. Plus we can't have her own two vehicles at once. I get that part too.

And advice would be appreciated. Thanks in advance.

 

[LdiJ]

What is the name of your state? Ohio

My sister is on SSI and owns her own vehicle. It's a 1999 Honda Accord. As the vehicle is her daily driver the car does not count as a resource toward her income limit. What I would like to know is if it's possible for her to gift the car to a relative while not impacting her SSI eligibility. My local SSA office can't give me a straight answer on this issue.

The woman at the office told me that she is not allowed to gift anything and that to transfer ownership of the vehicle from herself to a relative it would require her to officially sell it and count the money as income.

I don't understand why she can't gift the vehicle. It isn't being counted as a resource now and everyone is allowed to gift up to $X per year without it being counted as taxable income per the IRS.

The car's value is below $2,000. Is it true she can't gift it? Does she have to sell it at Kelley Blue Book Value? The car is nearly 20 years old with 180K miles on it. The KBB value is roughly $1,500 but I doubt I could get anyone to buy this beat up thing for more than $300.

Regardless of how we rid the car from her I would then like to gift her my car. This part I believe I understand: I'm allowed to gift her my car as long as she retains it for at least 30 days and it is her daily driver. No problem there. She's going to use it as her daily driver for as long as possible. Plus we can't have her own two vehicles at once. I get that part too.

And advice would be appreciated. Thanks in advance.

You sell her your car, and she uses her car as a down payment. You set up very modest payments for her to pay towards the balance due on your car, and they forgive those payments down the road.

 

[rp782011]

You sell her your car, and she uses her car as a down payment. You set up very modest payments for her to pay towards the balance due on your car, and they forgive those payments down the road.

Why would I do this though?

She simply needs to exit out of her ownership of the car she has now: the 1999 Accord.

At that point I can gift her my car and avoid paying the sales tax on it. It's a 2007 Accord and the KBB value is roughly $5,000.

If I officially sell her the car I get hit with the taxes and then she must provide that documentation of payments for X years. That's a lot of time and money down the drain.

 

[xylene]

The people at SocSec didn't have a straight answer for you on how to game the system. The extra hassle is how they detect fraud in non arms length transactions.

 

[LdiJ]

Why would I do this though?

She simply needs to exit out of her ownership of the car she has now: the 1999 Accord.

At that point I can gift her my car and avoid paying the sales tax on it. It's a 2007 Accord and the KBB value is roughly $5,000.

If I officially sell her the car I get hit with the taxes and then she must provide that documentation of payments for X years. That's a lot of time and money down the drain.

You are asking for a way to legally handle the matter. I gave you a way to do it legally. You simply cannot have it all ways. Why does she have to prove documentation of payments? Why can't you just forgive the payments? Oh, and the sales tax would be on her, not you.

The only other option I can think of is that you sell her the car for the value of her car, and she gives you her car as payment.

 

[rp782011]

You are asking for a way to legally handle the matter. I gave you a way to do it legally. You simply cannot have it all ways. Why does she have to prove documentation of payments? Why can't you just forgive the payments? Oh, and the sales tax would be on her, not you.

The only other option I can think of is that you sell her the car for the value of her car, and she gives you her car as payment.

Sorry if I came off snippy. I've been dealing with the SSA for several days on this so obviously I'm frustrated. I like to get quoted statutes on where answers are and nobody down there can do that.

I understand they are trying to prevent fraud but I'm not trying to commit fraud and their alternative is money and time down the drain...like I said.

I guess I'm going to have to jump thru the hoops.

1. Have her sell the car to my nephew for $1.500 because that's what it's worth according to KBB.
2. Use that money as a down payment on my car and then provide documentation that she's making payments to make up the difference to get to $5,000.

It's kind of ironic that to be in compliance I'm actually going to be committing fraud. God Bless America...LOL.

 

[rp782011]

The people at SocSec didn't have a straight answer for you on how to game the system. The extra hassle is how they detect fraud in non arms length transactions.

Like I just said in order to be in compliance I'm going to have to actually commit fraud. Officially I'm selling her the car but in reality I'm just giving it to her. Each month I'll write out a receipt/whatever to show she's paying me even though she isn't.

Gotta love it.

 

[LdiJ]

Like I just said in order to be in compliance I'm going to have to actually commit fraud. Officially I'm selling her the car but in reality I'm just giving it to her. Each month I'll write out a receipt/whatever to show she's paying me even though she isn't.

Gotta love it.

Why do you think that you have to sell the car to her at FMV? People sell cars below FMV all the time. In fact, with older cars FMV is very subjective.

 

[rp782011]

Why do you think that you have to sell the car to her at FMV? People sell cars below FMV all the time. In fact, with older cars FMV is very subjective.

I did a bit more research and found that the SSA uses the NADA pricing guide under "average trade-in value" to determine the "current market value (CMV) of the resource".

Her 1999 Accord is valued at $1,075.

Do you think I could just have her sell the 1999 Accord to my nephew for that $1,075 and then turn around and give me that exact amount to buy my 2007 Accord?

Obviously no money is changing hands here...just talking about the documentation.

 

[HRZ]

It seems as if nada value is a safe number to use for SSI purposes.

You would be safer to have a written payment plan and actual payment proof like records/copies of checks

If you chose you chose to make other gifts to that person so be it . but be smart enough that the amounts and dates do not line up with required payments . I doubt anyone is going to challenge a $1000 transaction but you are prepared if they do.

 

[Janke]

https://secure.ssa.gov/apps10/poms.nsf/lnx/0500830520

2. Gift of a car
A gift of a car that qualifies as a wholly or partially excluded resource if retained into the month after the month of receipt is not income. If the car does not qualify as a wholly or partially excluded resource (e.g., it is a second car), the car is counted as income in the month it is received.

If a person does not have a car and gets a gift of a car it is not income. If they have a car and get a gift of a car, it is income valued at the market value. There are multiple ways to determine market value.



https://secure.ssa.gov/apps10/poms.nsf/lnx/0501150003


Giving away a car can fall under the resource transfer rules. No one on SSI should ever quote IRS rules about anything since SSI is much more restrictive. So if a car is given away, the value of the car could create a period of ineligibility because the SSI recipient should have used the money from the resource transfer to live on rather than live on the SSI.

Book value of cars is one method of placing a value on it. Place an ad on Craigslist. There is also what the market will pay. Someone will make an offer. There is an asking price, there is an offer, there is negotiation. So the value is what the car can be sold for on the local open market.


In reality, it is unlikely that SSA will ask for much documentation at all. So go ahead and phony up your proofs. I am guessing you have experience in dummy proofs. In terms of fraud, it is not much, but following the rules is not that much more difficult.

 

[rp782011]

https://secure.ssa.gov/apps10/poms.nsf/lnx/0500830520

2. Gift of a car
A gift of a car that qualifies as a wholly or partially excluded resource if retained into the month after the month of receipt is not income. If the car does not qualify as a wholly or partially excluded resource (e.g., it is a second car), the car is counted as income in the month it is received.

If a person does not have a car and gets a gift of a car it is not income. If they have a car and get a gift of a car, it is income valued at the market value. There are multiple ways to determine market value.



https://secure.ssa.gov/apps10/poms.nsf/lnx/0501150003


Giving away a car can fall under the resource transfer rules. No one on SSI should ever quote IRS rules about anything since SSI is much more restrictive. So if a car is given away, the value of the car could create a period of ineligibility because the SSI recipient should have used the money from the resource transfer to live on rather than live on the SSI.

Book value of cars is one method of placing a value on it. Place an ad on Craigslist. There is also what the market will pay. Someone will make an offer. There is an asking price, there is an offer, there is negotiation. So the value is what the car can be sold for on the local open market.


In reality, it is unlikely that SSA will ask for much documentation at all. So go ahead and phony up your proofs. I am guessing you have experience in dummy proofs. In terms of fraud, it is not much, but following the rules is not that much more difficult.

After doing more and more research I'm definitely feeling this as my approach. The law makes no sense as giving away a car does not earn you money but I understand that we are talking about the law...not logic or even morality.

And you're right about the IRS-SSI comparison. Apparently people on SSI don't have full rights like other citizens. What a shame. But yes, I've done this dance before with imaginary proofs.

My sister is mentally disabled, not physically disabled, so I do get a bit emotional on this stuff. She's had a hard enough life to not have to play these games.

I suppose I'm going to have to have her "sell" her car to my nephew for $1,000. Make sure the money doesn't put her over the $2,000 income limit threshold for the month. Then I'll gift her my car.

She likes to drive about 2 miles from her place to the YMCA and also to a diner across from the Y twice a week to meet people in a volunteer group. It means the world to her so I'm going to make sure I get this done without her losing eligibility.

Thanks to everyone who replied. Just have to bounce things off others from time to time...especially when we are talking about these insane rules.

 

[xylene]

I understand that we are talking about the law...not logic or even morality.

I don't actually think you have a natural right to avoid sales tax, which seems to be the crux of your issue.

 

[rp782011]

I don't actually think you have a natural right to avoid sales tax, which seems to be the crux of your issue.

No it's not. No cars are being sold. I have to commit fraud by saying a car is being sold. The government is forcing me to commit fraud to remain in compliance. That's the irony here.

 

[paddywakk]

Why would I do this though?

She simply needs to exit out of her ownership of the car she has now: the 1999 Accord.

At that point I can gift her my car and avoid paying the sales tax on it. It's a 2007 Accord and the KBB value is roughly $5,000.

If I officially sell her the car I get hit with the taxes and then she must provide that documentation of payments for X years. That's a lot of time and money down the drain.

My sister recently was approved for SSI, and I don't think your sister can own a car worth $5000, even if you gift it to her. Just an FYI. The two of you should see if you can meet with her worker before you cause problems for her.