Selling or gifting a car to a family member
To the state, a car that stays in the family still changes owner, and it is either sold or given. Which one you write down decides the papers and the tax, and a token price on its own makes it neither a gift nor a cheap sale.
Decide: a sale or a gift
A real price, or none
Settle any loan first
The title has to be clear to move
Sign the title over
Same as any sale
File what your state asks
A gift affidavit, a statement, a notice
Sale or gift
Selling it or giving it away.
A sale has a price and a gift has none, and the states tax and record the two differently, even between parent and child.
A sale at a real price
The relative pays what the car is worth, or close to it, and the paperwork is the same as with a stranger: the title signed over, a bill of sale with the price, and the buyer’s tax on that price when they title the car.
A gift
No money changes hands. Texas asks for a gift affidavit and charges a small flat tax instead of the sales tax, and California has its own statement for a gift between family members; both are set out below.
A token price
Writing one dollar on the papers does not turn a sale into a gift. In Texas a private sale between family members is still taxed on the price paid or on 80 percent of the car’s standard presumptive value, whichever is greater. Give it, or sell it for what it is worth.
The person who gives it
In California’s terms the registered owner on the title is the seller even when the car is a gift. Whatever the price, that is the person who signs the title over and files the state’s notice afterwards.
Before you sign
What has to be clear first.
A car between relatives is often a car with a story, and the title has to say what the family already knows before it can move.
If there is still a loan on it, the lender holds or is named on the title, and the payoff comes first: selling a car you still owe money on explains how. A relative taking over the payments does not move the loan or the title by itself.
If the title is in a different name, a parent who has died, a former spouse, or the person the car was bought from and never retitled, that is the first thing to put right. The route after a death is in selling a car after the owner has died. In Texas, a car awarded in a divorce is titled with a certified copy of the decree, and one the decree does not award needs the former spouse to sign the title over. For anything else, ask the agency that issued the title.
Agree the value even for a gift. It is what the buyer’s tax is measured against in a sale, what a federal gift tax return would ask for, and what keeps the rest of the family from wondering later. How to price a used car works the same between relatives as between strangers.
Two states
How Texas and California handle it.
Both treat a gift inside the family differently from a sale. Here are the two, read on the agencies' own sites.
Texas
To give a car to a relative, the signed title and the Application for Texas Title and/or Registration, Form 130-U, go to the county tax office with an Affidavit of Motor Vehicle Gift Transfer, Comptroller Form 14-317. The giver and the recipient both sign the affidavit and the application, and one of them takes everything in person. The recipient pays a $10 gift tax, due when the title is transferred, instead of the sales tax, when the car comes from a spouse, parent or stepparent, grandparent or grandchild, child or stepchild, sibling, guardian, a decedent’s estate or a nonprofit 501(c)(3).
Read on txdmv.gov and comptroller.texas.gov on 9 October 2026.
California
A gift within the family goes through with the title and a Statement of Facts, REG 256, which claims the exemption from use tax for a car received from an eligible family member or as a gift. The same statement exempts a transfer between a parent, grandparent, child, grandchild, brother, sister, spouse or domestic partner from the smog certification, though a smog check may still be due if the registration is up for renewal. Without an exemption, the use tax is charged at the rate where the new owner lives. The change of owner has to reach the DMV within 10 days, and fees paid later than 30 days bring penalties.
Read on dmv.ca.gov on 9 October 2026.
For any other state, start with the agency that issues titles: USA.gov lists the motor vehicle agency for every state. Ask whether it has a gift form, and which relatives it counts as family.
The tax
What each side may owe.
A state's tax on the car falls on the person receiving it; the federal gift tax, where it applies at all, falls on the person giving.
The buyer’s tax in Texas
On a sale, the buyer pays tax on the price or on 80 percent of the standard presumptive value, whichever is greater, and a sale between relatives is no exception. A buyer who paid less can lower it only with a certified appraisal from a licensed dealer or a licensed insurance adjuster, obtained within 30 days of the purchase. A gift from an eligible relative skips this and costs the $10 gift tax instead. The standard presumptive value comes from a regional guide of private-party prices and leaves the car’s condition out, which is why the appraisal route exists for a car worth less than its model usually is.
The federal gift tax
The IRS counts as a gift any transfer for which full value is not received in return, and says the person giving is generally the one who pays the gift tax. A gift no larger than the annual exclusion, $19,000 per recipient for 2026, is not a taxable gift, and neither is a gift to your spouse. Making a gift does not ordinarily affect your federal income tax, and its value cannot be deducted.
Where to stop
Whether a return is due on a larger gift, and what the car counts as, is a question for the IRS’s own pages or a tax professional, not for a page about selling cars. The numbers above are the IRS’s, read on irs.gov on 9 October 2026.
On the day
Handing it over inside the family.
The handover is the same as with a stranger, and the shortcuts families take are the ones that come back as parking tickets in the giver's name.
Sign the title over completely and file whatever notice your state asks of the person letting the car go. In California that is the Notice of Transfer and Release of Liability, within 5 days. In Texas it is the Vehicle Transfer Notification: filed within 30 days, it means the new owner’s parking tickets and tolls are not yours. Until the state’s records show the new owner, the car is still yours on paper, whoever is driving it.
Write it down even when no money changes hands. A bill of sale records the date, the car and the price, and for a gift the price is what you both agree it is, including nothing. It is the page that answers the question of when the car stopped being yours.
Ask the relative to insure the car in their own name before they drive it away. Your coverage on a car you no longer own is not something to rely on, and a new owner without a policy is a problem for both of you.
Read next
The rest of the handover, wherever the car is going.
Family or not, the title, the mileage and the paperwork work the same way.
The whole process, in order: how to sell a car privately.
More in special situations- Selling a car you still owe money on
The lender holds the title, so the payoff has to happen inside the sale rather than after it. How that works, what to ask for in writing, and the safest place to do it.
- How to sell a leased car
You cannot sell a car you do not own, so a lease sale is really a buyout followed by a sale. How the numbers work, and why your lender may not allow it.
- How to sell a car that does not run
A car that will not start still has three kinds of buyer and a real price. What to find out first, what to disclose, and how the handover works without a test drive.
Frequently asked questions
Can I sell my car to a family member for $1?
You can write any price, but it may not do what you expect. In Texas a private sale between family members is taxed on the price or on 80 percent of the car's standard presumptive value, whichever is greater, while a gift from an eligible relative costs a $10 gift tax. If no real money is changing hands, giving the car is usually the cleaner route.
Is it better to gift a car or sell it to family?
If no money changes hands, a gift says so honestly and, in Texas and California, has its own lighter route for close relatives. If the relative is paying, call it a sale at the price actually paid.
Who pays the tax when a car is given as a gift?
The state's tax on titling the car falls on the person receiving it: in Texas a $10 gift tax for an eligible relative. The federal gift tax, if any is due, is generally paid by the person giving, and a gift no larger than the annual exclusion, $19,000 for 2026, is not a taxable gift.
Do I need a bill of sale to give a car to a family member?
Your state may not ask for one, but it is worth writing: it records the date the car stopped being yours, which is what matters if a ticket or a toll arrives later.
Which relatives count as family?
It depends on the state and on the purpose. Texas lists a spouse, parent or stepparent, grandparent or grandchild, child or stepchild, sibling, guardian, a decedent's estate or a nonprofit for its $10 gift tax; California's smog exemption names parents, grandparents, children, grandchildren, brothers, sisters, spouses and domestic partners.
If it is leaving the family, show it properly.
One page with the car, the price and the photographs, for a sale to anybody else. 10 days free.