[EZ_TUR90]

If I were to gift my car to my friend for example, Would he have to pay the taxes on the car? I would be gifting him a car that 50% paid off, and he would be refinancing it under his name, does he have to pay the tax?

This is for California.

[khaye1]

he would be paying taxes on whatever he's refinancing...the money that he's giving you (if he's giving you any) will not be included in the sale price.

[MKR_DmD]

When he goes and change the plates over they will ask how much he got the car for. Then they charge him tax off of that amount.

[EZ_TUR90]

Originally Posted by DrivinMissDaisy

When he goes and change the plates over they will ask how much he got the car for. Then they charge him tax off of that amount.

If I am transferring over my loan, technically there isn't a sale amount. I'm gifting him a partially paid off vehicle. lol

[EZ_TUR90]

I was just wondering if there is any way of going around paying the tax on the car.

[Saigon]

Originally Posted by EZ_TUR90

I was just wondering if there is any way of going around paying the tax on the car.

I don't know if you want to do that. If you get caught it's serious trouble. It's not worth it IMO. Besides, its not you that's paying the tax, it's your friend right?

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

If I am transferring over my loan, technically there isn't a sale amount. I'm gifting him a partially paid off vehicle. lol

Is there any equity in the car?

This sounds like a traditional assumption of loan situation. And if there is no equity, you're not giving him anything.

[EZ_TUR90]

Originally Posted by Marcus-SanDiego

Is there any equity in the car?

This sounds like a traditional assumption of loan situation. And if there is no equity, you're not giving him anything.

Hes taking over a 30k loan on my porsche.

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

Hes taking over a 30k loan on my porsche.

So he is assuming the loan.

And if there is no equity, you don't have to worry about giving him anything.

What's the car worth?

[EZ_TUR90]

Originally Posted by Marcus-SanDiego

So he is assuming the loan.

And if there is no equity, you don't have to worry about giving him anything.

What's the car worth?

KBB its about 35k, yes he would be assuming my loan.

[khaye1]

If he's financing the car through a financial institution...then he's paying taxes, no way around it. If he has cash to give you then you pay it off under you name...then give it to him as a "gift" then maybe. Although I seriously doubt that the DMV official looking at your/his paperwork will believe you. If he's assuming the loan I don't think you have to pay, since the initial taxes were paid but I'm not sure???

[EZ_TUR90]

I'll have to wait for the loan to go through and Ill give you guys an update.
I think hes gonna be stuck paying the huge tax

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

KBB its about 35k, yes he would be assuming my loan.

OK, so he will owe taxes on the $30K. That's the amount of the loan that he is assuming. What's more, he is not giving you any more consideration for the vehicle. If, however, he had given you $10K cash -- on top of assuming a $30K loan -- he would have to pay tax on $40K. In other words, the friend is taxed on ALL of the consideration given to acquire the vehicle.

In this case, he is merely assuming the loan (that constitutes all of his consideration given). The amount is $30K. That's the taxable amount that he is stuck with.

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

If I were to gift my car to my friend for example, Would he have to pay the taxes on the car? I would be gifting him a car that 50% paid off, and he would be refinancing it under his name, does he have to pay the tax?

This is for California.

Figure I may as well answer this hypothetical, too.

If this had been a true gift (you owned a $30K car outright), the donee (the recipient of the gift) would not have to pay tax. Instead, the donor would be charged with paying the tax.

Assuming there is a gift-tax exclusion (up to a certain amount), the donor pays taxes on the difference. Thus, if you had a $14,000 gift-tax exclusion, for example, you'd only have to worry about paying taxes on $16,000.

In sum, the gift giver (donor) is responsible for paying taxes. The gift receiver (donee) is not.

Hope that helps.

[EZ_TUR90]

Originally Posted by Marcus-SanDiego

Figure I may as well answer this hypothetical, too.

If this had been a true gift (you owned a $30K car outright), the donee (the recipient of the gift) would not have to pay tax. Instead, the donor would be charged with paying the tax.

Assuming there is a gift-tax exclusion (up to a certain amount), the donor pays taxes on the difference. Thus, if you had a $14,000 gift-tax exclusion, for example, you'd only have to worry about paying taxes on $16,000.

In sum, the gift giver (donor) is responsible for paying taxes. The gift receiver (donee) is not.

Hope that helps.

Im not looking to pay the taxes.

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

Im not looking to pay the taxes.

And you won't have to.

This is not a gift scenario.

The tax burden, in this case, is on the buyer (your friend).

Best of luck.

[EZ_TUR90]

Originally Posted by Marcus-SanDiego

And you won't have to.

This is not a gift scenario.

The tax burden, in this case, is on the buyer (your friend).

Best of luck.

Thanks A lot Bud.

[Marcus-SanDiego]

Originally Posted by EZ_TUR90

Thanks A lot Bud.

You are welcome.

Take care.