Gifting a car to MIL
Gifting a car to MIL
I am gifting care to my mother in law. Value of the car is about $17,000. Do I have to pay a gift tax? Will my MIL be required to pay sales tax? Any idea how much these are. I am residing in the state of NY.
Re: Gifting a car to MIL
No gift tax and no sales tax. Do you think the value might be more like $15,000?
Gill
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Re: Gifting a car to MIL
No one ever has to pay a "gift tax" - the closest thing is you have to file a gift tax form for gifts that exceed the yearly gift exemption (now $15,000 per person). This would only come into play if you ever had to pay estate tax - the gift amount over the yearly exemption would be subtracted from your lifetime estate tax exemption. I would try to see if you can plausibly value the car at $15,000 or less (ie. if you use Kelly Blue Book private party Good condition, try Fair, then try a trade-in value), then tuck the documentation away in case you get audited (extremely unlikely).
I believe NY state DMV has a mechanism to gift a car to a family member without needing to pay sales tax. This form looks to be where you declare the gift. Because the recipient isn't one of the listed family members (parent, child, spouse, stepparent, stepchild) you have to also sign the affidavit that you didn't accept any money/services/barter in exchange for the gift, but it should be no problem. Talk to the DMV though to make sure you do it correctly.
I believe NY state DMV has a mechanism to gift a car to a family member without needing to pay sales tax. This form looks to be where you declare the gift. Because the recipient isn't one of the listed family members (parent, child, spouse, stepparent, stepchild) you have to also sign the affidavit that you didn't accept any money/services/barter in exchange for the gift, but it should be no problem. Talk to the DMV though to make sure you do it correctly.
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Re: Gifting a car to MIL
Are you and spouse both giving this to MIL?
If so, there is no tax and also no reporting if the two of you gift up to $30k ($15k each) to one person).
There wouldn't be any tax due now no matter what, but if you exceed the $15k per person to each other person, then there is a form that needs to be filed, and that amount will be added to the lifetime exemption. And no tax then, either, unless the limit is reached. (This is for Federal; state may have lower lifetime limits.)
No problem.
But do pay attention if there is any sales tax b/c this is a car and not some other type of gift(?).
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Re: Gifting a car to MIL
No, you do not and no, your MIL does not. I think this is a great move on your part.
Re: Gifting a car to MIL
Um maybe on the sales tax. We gifted our daughter a Honda Fit, FMV IIRC about $7K-$8K. We lived in a different state than our daughter. Being we lived in a state w/o sales tax, WA state nicked our daughter close to $1K when she registered it for the first time because it was new to the state and hadn't had sales tax paid on it before. I don't remember all the details but I was shocked at the registration fee as I had to pay for it for her as she didn't have $1k in here checking account at the time.
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Re: Gifting a car to MIL
I think some DIY brake work on your MIL's vehicle would bring the value down to $15k and perhaps have benefits beyond the gift tax exclusion.
Re: Gifting a car to MIL
It's fairly easy to do that. Just create a SLAT to capture today's historically high lifetime exemption. Then, any taxable gift over 15,000 owes a gift tax.fyre4ce wrote: ↑Mon Jun 14, 2021 7:11 pm No one ever has to pay a "gift tax" - the closest thing is you have to file a gift tax form for gifts that exceed the yearly gift exemption (now $15,000 per person). This would only come into play if you ever had to pay estate tax - the gift amount over the yearly exemption would be subtracted from your lifetime estate tax exemption.
Re: Gifting a car to MIL
Thanks for clarifying; I didn't know that was possible. I should have known never to say "no one ever". I think I've yet to find a tax provision to which there isn't some exception.Lee_WSP wrote: ↑Tue Jun 15, 2021 1:41 amIt's fairly easy to do that. Just create a SLAT to capture today's historically high lifetime exemption. Then, any taxable gift over 15,000 owes a gift tax.fyre4ce wrote: ↑Mon Jun 14, 2021 7:11 pm No one ever has to pay a "gift tax" - the closest thing is you have to file a gift tax form for gifts that exceed the yearly gift exemption (now $15,000 per person). This would only come into play if you ever had to pay estate tax - the gift amount over the yearly exemption would be subtracted from your lifetime estate tax exemption.
Re: Gifting a car to MIL
No problem. It’s not really an exception, just an amount so large that no average person will ever hit it. Currently less than 1% of families can even fill up the lifetime exemption.fyre4ce wrote: ↑Tue Jun 15, 2021 2:06 amThanks for clarifying; I didn't know that was possible. I should have known never to say "no one ever". I think I've yet to find a tax provision to which there isn't some exception.Lee_WSP wrote: ↑Tue Jun 15, 2021 1:41 amIt's fairly easy to do that. Just create a SLAT to capture today's historically high lifetime exemption. Then, any taxable gift over 15,000 owes a gift tax.fyre4ce wrote: ↑Mon Jun 14, 2021 7:11 pm No one ever has to pay a "gift tax" - the closest thing is you have to file a gift tax form for gifts that exceed the yearly gift exemption (now $15,000 per person). This would only come into play if you ever had to pay estate tax - the gift amount over the yearly exemption would be subtracted from your lifetime estate tax exemption.
Re: Gifting a car to MIL
LOL!JustGotScammed wrote: ↑Tue Jun 15, 2021 1:24 am I think some DIY brake work on your MIL's vehicle would bring the value down to $15k and perhaps have benefits beyond the gift tax exclusion.
Re: Gifting a car to MIL
As far as the sales tax, the important factor is the state that your MIK will be registering the car. Is she also a NY resident?