My Car (under parent's name)

[Aimster]

They had the loan out under their name but I was making the payments.
Car has to go under my name because of insurance reasons.

When I go to the Department of Motor Vehicles what do I tell them? I can't say it was a gift can I?
I am not trying to pay taxes on a car that I've basically owned all this time.

 

[Crusty]

Have your parents sell you the car for $1.

 

[Aimster]

Originally posted by: Crusty
Have your parents sell you the car for $1.

Won't that put up a red flag?

 

[LemonHead]

Is it paid off? Should just be able to have a title transfer done.

 

[GeekDrew]

Yeah, they need to sell you the car for a really low amount of money -- or at least that's what we were advised to do in a similar situation a few years ago.

 

[Aimster]

It's paid off but since I am getting the new title I have to tell them how much I bought the car for so I can pay taxes on it.

I want to just put $1 down but that is way off from the $12,000-15,000 the car is worth now.

 

[mugs]

I'd call it a gift. I don't think the state DMVs would report that to the IRS, but even if they do it'd only matter if the car is worth more than $24k (assuming you have two parents). And even if it's worth more than $24k, it'd just count toward your parents' $1 million lifetime gift tax exemption, they wouldn't actually have to pay any taxes.

 

[LemonHead]

Originally posted by: Aimster
It's paid off but since I am getting the new title I have to tell them how much I bought the car for so I can pay taxes on it.

I want to just put $1 down but that is way off from the $12,000-15,000 the car is worth now.

I think you can state that is was a gift from them. I guess every state is different but I don't see why you can't have a bill of sale for a $1 and pay tax on that. There's no law that they can't sell it to you for whatever price they want.

 

[mugs]

Originally posted by: LemonHead

Originally posted by: Aimster
It's paid off but since I am getting the new title I have to tell them how much I bought the car for so I can pay taxes on it.

I want to just put $1 down but that is way off from the $12,000-15,000 the car is worth now.

I think you can state that is was a gift from them. I guess every state is different but I don't see why you can't have a bill of sale for a $1 and pay tax on that. There's no law that they can't sell it to you for whatever price they want.

Some states would make you pay tax on the current value of the car, because a lot of people try to claim they paid less than they actually did to save money on taxes.

 

[OdiN]

Should have had the loan in your name with them as a co-buyer, or you as a co-buyer.

 

[Bignate603]

In NY I think you can do a gift of a vehicle from parent to child without taxes getting involved. If it's to someone that isn't related you have to pay. Heck, you even have to pay sales tax on private party auto sales. They tax you on what you say you paid for it, so obviously they get tons of people claiming to buy vehicles for <$500.

If you think that the $1 might raise a red flag you can always just put in a higher number as long as they won't collect sales tax on that amount.