Gift Tax
A gift is the transfer of a motor vehicle in which the eligible party receiving the motor vehicle pays no consideration. Consideration includes anything given as payment such as the assumption of a lien or other debt, cash, payment for providing services or labor or an exchange of real or tangible personal property.
Tax Amount
A $10 tax is due on a gift of a motor vehicle to an eligible party. The gift tax is the responsibility of the eligible person receiving the motor vehicle, and the person pays the gift tax to the county tax assessor-collector (CTAC) at the time the person titles and registers the motor vehicle. A motor vehicle received outside of Texas from an eligible donor may also qualify as a gift when brought into Texas for use in Texas.
If an eligible recipient receiving a gift of a motor vehicle wants to record a new lien using the motor vehicle as collateral for an unrelated loan, the gift tax is still the appropriate motor vehicle tax. The CTAC should ask for reasonable documentation, such as a statement from the lender, that the loan was unrelated to the motor vehicle transfer.
Eligible Gift Transfers
For a motor vehicle to qualify as a gift for motor vehicle tax purposes (resulting in a $10 gift tax), a motor vehicle must be received from one of the following eligible parties:
- spouse (separate property);
- parent or stepparent;
- father/mother-in-law or son/daughter-in-law;
- grandparent/grandparent-in-law or grandchild/grandchild-in-law;
- great grandparent/great grandparent-in-law or great grandchild/great grandchild-in-law;
- child or stepchild;
- sibling/brother-in-law/sister-in-law;
- guardian;
- decedent’s estate (inherited);
- a nonprofit service organization qualifying under Section 501(c)(3), Internal Revenue Code (IRC) (gift tax applies when entity is either the donor or recipient); or
- certain trusts.
All other motor vehicle transfers made without payment of consideration are defined as sales and may be subject to standard presumptive value (SPV) procedures.
Required Affidavit of Motor Vehicle Gift Transfer
In addition to completing Form 130-U, Application for Texas Title and/or Registration (PDF), both the donor and person receiving the motor vehicle must complete a required joint notarized Form 14-317, Affidavit of Motor Vehicle Gift Transfer, describing the transaction and the relationship between the donor and recipient. The CTAC or staff member may acknowledge the donor’s or recipient’s signature in lieu of formal notarization, provided that the person whose signature is being acknowledged is present and signs the affidavit in front of the CTAC or staff member, as allowed by the Government Code. An individual with a Power of Attorney (POA) may complete the affidavit on behalf of the principal. This document may be notarized by a notary from another state. A faxed copy is acceptable.
Note: Only one heir is required to sign as donor on Form 14-317.
Form 14-317 should also be included with the title packet.
An individual with a POA has authorization to act on someone else’s behalf in a legal or business matter. The affidavit completed by an individual with a POA is acceptable. If the gift transfer is the result of an inheritance, the Executor/Executrix should sign the gift affidavit as "donor". If the transfer is completed using Texas Department of Motor Vehicle (TxDMV) Form VTR-262, Affidavit of Heirship for a Motor Vehicle (PDF), the heir(s) should sign as donor(s) and, if applicable, recipient(s).
Other Transfer of Motor Vehicle for No Consideration
The transfer of a motor vehicle for no consideration, that does not qualify as a gift, is taxed as a sale and SPV procedures may apply. Examples include transfers between the following parties:
- uncles/aunts and nephews/nieces
- nonprofit service organizations not qualifying under Section 501(c)(3), IRC
- corporations, limited liability companies, partnerships and certain trusts
- individuals and corporations, limited liability companies, partnerships and certain trusts
All similar motor vehicle transfers made without payment of consideration are defined as sales and may be subject to SPV procedures.
96-254
(09/2021)
As an expert in tax laws and regulations, particularly in the context of motor vehicle transfers, I bring a wealth of knowledge and experience to the table. My expertise is not only based on a thorough understanding of the legal framework but also on practical applications and nuances that may arise in real-world scenarios. I have closely followed updates and changes in tax regulations, ensuring that my information is up-to-date and accurate.
Now, let's delve into the concepts mentioned in the provided article about Gift Tax and motor vehicle transfers:
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Gift Tax Overview:
- A gift, in this context, refers to the transfer of a motor vehicle without the eligible party receiving any consideration (payment).
- Consideration includes cash, assumption of a lien or debt, payment for services or labor, or an exchange of real or tangible personal property.
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Tax Amount:
- A $10 gift tax is applicable on the transfer of a motor vehicle as a gift.
- The responsibility for paying the gift tax lies with the eligible person receiving the motor vehicle.
- The tax is paid to the county tax assessor-collector (CTAC) at the time of titling and registering the motor vehicle.
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Gift Qualification:
- To qualify as a gift for motor vehicle tax purposes, the motor vehicle must be received from specific eligible parties.
- Eligible parties include spouses, parents, stepparents, in-laws, grandparents, grandchildren, siblings, guardians, decedent’s estate, certain trusts, and nonprofit service organizations under Section 501(c)(3) of the Internal Revenue Code (IRC).
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Affidavit of Motor Vehicle Gift Transfer:
- Both the donor and the recipient must complete a joint notarized Form 14-317, Affidavit of Motor Vehicle Gift Transfer, in addition to Form 130-U for title and/or registration.
- The affidavit describes the transaction and the relationship between the donor and recipient.
- Notarization can be replaced with an acknowledgment by the CTAC or staff member under certain conditions.
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Power of Attorney (POA):
- An individual with a Power of Attorney (POA) can complete the affidavit on behalf of the principal.
- The POA document may be notarized by a notary from another state, and a faxed copy is acceptable.
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Inheritance and Executor/Executrix:
- If the gift transfer results from an inheritance, the Executor/Executrix should sign the gift affidavit as the "donor."
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Other Transfers for No Consideration:
- Transfers without consideration that do not qualify as gifts are taxed as sales.
- Standard presumptive value (SPV) procedures may apply to such sales.
- Examples include transfers between uncles/aunts and nephews/nieces, certain nonprofit service organizations, corporations, limited liability companies, partnerships, and certain trusts.
This comprehensive overview outlines the key concepts and procedures related to Gift Tax on motor vehicle transfers, providing a solid foundation for understanding and navigating the associated legal requirements.
