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- Some states verify the VIN or require an inspection before they’ll title a car from out of state, so ask the recipient’s DMV what applies before the car travels.
- If your family member is going to drive the car home, call your insurer before you give them the keys. Make sure your policy covers the trip. Find out who is insured to drive and when the new owner’s coverage should start.
- Complete the title and registration paperwork promptly after the transfer. Some states set a deadline for titling a newly acquired car, and late fees may apply.
You can gift a car to a family member who lives in another state. However, you’ll need to follow the vehicle title transfer requirements in your state and the registration requirements in the recipient’s state.
To transfer ownership, you’ll generally need to sign over the vehicle’s title, indicate that the car is a gift and provide any required documentation, such as a gift affidavit. The recipient must then apply for a new title and register the vehicle in their home state.
Before transferring the car, check both states’ DMV requirements, resolve any outstanding liens and make sure the recipient has the required car insurance before driving the vehicle.
Read more: How to get car insurance when gifting a car
How do you transfer a car title to a family member in another state?
To transfer a car title to a family member in another state, you’ll need to complete the ownership transfer paperwork and follow the Department of Motor Vehicles (DMV) requirements in both states.
Here are the steps to transfer the title:
- Clear any lien: If you still owe money on the car, pay off the loan and get a lien release from your lender before you sign over the title.
- Check both states’ DMV requirements: Confirm the paperwork needed to transfer ownership and register the vehicle in the recipient’s state.
- Sign over the vehicle’s title: Complete the ownership transfer on the existing title, including the recipient’s name, address, transfer date and odometer reading, if required. Indicate that the vehicle is a gift.
- Complete any additional paperwork: Some states require a gift affidavit, bill of sale or other documentation to establish that no money was exchanged.
- Register the vehicle in the recipient’s state: Your family member must submit the signed title and any required forms to their state’s DMV. They’ll also need to provide proof of insurance and pay applicable fees to register the car. Some states require VIN verification or an inspection before issuing a title for an out-of-state vehicle.
- Notify your state’s DMV: File a notice of transfer if required, and follow your state’s laws for handling license plates.
Will the recipient’s state charge sales tax on a gifted car?
Whether your family member owes sales tax on a gifted car usually depends on the state where they live and register the vehicle. Many states offer sales tax exemptions for gifts between close relatives, although you may need to sign a statement confirming that no money was exchanged. Title and registration fees may still apply.
For instance, Arkansas treats a gift as tax-free when you and the recipient both sign a gift affidavit, and the person giving the car paid sales tax when they bought it and registered it in their own name.
Avoid listing the car as a $1 sale to simplify the transfer. Even a small payment can make the transaction a sale rather than a gift, which may affect its tax treatment.
You generally don’t have to worry about federal gift tax. In 2026, you can give up to $19,000 in gifts to a person without needing to file a federal gift tax return. The car’s fair market value is included, and any other gifts you give that person in the same year also count toward this limit.
If the car’s value exceeds that amount, you may need to file a gift tax return, but that doesn’t necessarily mean you’ll owe tax.
Get the insurance timing right before you hand over the keys
Insurance timing matters on both sides of the handoff. Most states ask for proof of insurance when you register a car, so your family member needs their own policy first and you need yours until the title changes. A coverage gap could end up costing money.
Keep these things in mind before you decide to gift a car:
- Keep your policy active. The car is still yours and your responsibility until the title is transferred.
- Ask the recipient to get a quote and buy a policy. They can use the car’s VIN before going to the DMV. Their rate may differ from yours, especially if they are younger or new to driving, so getting a quote in advance is helpful.
- Transfer the title and register the car. After their insurance is active, they can register the car in their state.
- Cancel your policy only after the transfer is complete. Check with your insurer about the timing so you don’t end up paying for a car you no longer own.
If the car will stay in their state while it’s still in your name, call your insurer first. Where the car is kept can affect your coverage, so it’s better to know before you need to file a claim.
Read more about switching your car insurance when you move to a new state
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The bottom line
Every state has its own rules for transferring a gifted car, so check with the DMV in the state where your family member lives before you hand over the keys. Ask whether you need a gift affidavit, what fees apply and whether the transfer qualifies for a tax exemption. Then line up their car insurance before they register. Getting these details right from the start can save you time and money.
Source
- Cornell Law School. “Sale of motor vehicles, trailers and semitrailers.” Accessed October 2026
- Internal Revenue Service. “Frequently asked questions on gift taxes.” Accessed October 2026
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