The process for gifting a car in Texas is not difficult, as long as you take care to complete all of the necessary paperwork promptly. Texas law requires that title transfers be completed within 20 business days of a change in vehicle ownership.

TX Title Transfers and Vehicle Registration

After you give a vehicle as a gift, the recipient will need to have it titled and registered in his name. To do this:

1. Give your signed and dated car title to the new vehicle owner.
2. Complete an affidavit of motor vehicle gift transfer, signed by both the giver of the vehicle and the new vehicle owner.
3. Have the new vehicle owner visit his county tax office to complete an application for a new title. (A bill of sale isn't required).

Although it is not required, you can also complete a vehicle transfer notification at your Texas DMV to state that you are no longer the owner of the vehicle. This document provides you with legal protection in the event that the recipient of the vehicle fails to complete the title transfer process in a timely fashion.

Transferring Titles and the Gift Tax

Giving vehicles as gifts is certainly a generous gesture, but please keep in mind that the Texas Department of Motor Vehicles (DMV) charges a $10 gift tax for vehicles that are given to a recognized non-profit organization or a family member. For the purpose of this tax, Texas defines a family member as a:

• Spouse
• Parent
• Stepparent
• Child
• Stepchild
• Grandparent
• Grandchild
• Sibling
• Legal guardian
• A relative's estate

If your vehicle was provided to another party without payment, but does not qualify for the gift tax, it will be taxed on the standard presumptive value.