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How To Gift A Car To A Family Member In Maryland

Are you considering gifting a car to a family member but you need more information about the rules, taxes, and fees? DARCARS 355 Toyota of Rockville can demystify the process. This page discusses how to gift a car to a family member, how to legally avoid sales and excise taxes, the benefits of gifting a car vs. selling for $1, and options for finding another daily driver for yourself. Let's get started!

Gifting a Car in Maryland: Current Guidelines

Every state has its own set of rules that govern how to gift a car to a family member to avoid excise taxes. Excise taxes are flat-rate percentages levied on specific goods, including automobiles. In Maryland, the Motor Vehicle Administration has four key elements that must be satisfied before you can legally gift a vehicle and avoid paying excise tax: proof of relationship, title, lien, and inspection.¹

Proof of Relationship

If you can provide proof that the recipient of your gifted vehicle is an immediate family member, you can avoid paying excise tax on your gift. Immediate family includes your spouse, children, adopted children, grandchildren, stepchildren, parents, stepparents, siblings, half-siblings, grandparents, in-laws, aunts and uncles over 65 years old, and nieces and nephews.

Certificate of Title

Your gifted vehicle must be titled and registered in Maryland to avoid excise tax. If your gifted automobile currently has an out-of-state title but was previously titled and registered in Maryland, you'll also be exempt from excise tax. In both instances, you'll need to submit a Maryland Gift Certification Form #VR-103 along with your Certificate of Title to the MVA. (We'll discuss important forms in more detail below.)

Lien Status

If your vehicle's title shows a lien, you must submit proof that the lien has been satisfied or an authorization for lien transfer from the lienholder. Please note that the current lienholder must approve adding or deleting a name on the title via a letter of permission written on the lienholder’s letterhead. Specifics about lien letter information and what needs to be included can be obtained by contacting Diversified Tag and Title Services of Maryland.

Vehicle Inspection

In Maryland, your gifted vehicle also requires an inspection from an automobile dealer, service station, or specialized automobile service center. These locations can issue you a 90-day Maryland Safety Inspection Certificate. However, vehicles gifted to spouses or children are exempt from inspection if titled in Maryland. An inspection is also not required if the vehicle is co-owned.

How To Transfer Plates on a Gifted Vehicle in Maryland

The state of Maryland allows a gifted vehicle license plate transfer in five specific scenarios:

If a husband and wife have joint ownership of the vehicle and one party transfers the title to the other.
If a husband or wife owns the vehicle and wants to add their spouse to the title.
If a parent and child jointly own the vehicle, one of those parties transfers the title to the other.
If a parent or child owns the vehicle and wants to add the parent or child to the title for joint titling.
If a parent or child owns the vehicle and wants to transfer the title to their parent or child.

All other scenarios of gifting a car to a family member require the purchase of new plates. If you'll be transferring plates with less than 12 months remaining in the vehicle's registration year, registration will be renewed for another year when the automobile is titled. Are there more than 12 months remaining in the registration year? Pay a $10 fee, and the MVA will transfer the plates. If plates cannot be transferred and are returned with 12 or more months remaining, you will receive a one-year registration fee refund.¹

Important Registration and License Plate Forms for Gifted Vehicles

Anyone who's ever registered and plated a vehicle knows that the MVA requires proof of insurance and a Certificate of Title. During your MVA appointment, the recipient of the gifted vehicle must also fill out an Application for Title and Registration. However, when you're gifting a car to a family member, you may also need to provide them with additional forms:

Gift Certification: In all instances of gifting a car to a family member, you'll need to complete an Application for Maryland Gift Certification Form #VR-103.
Niece/Nephew Gift: If you're an aunt or uncle (65 years or older) gifting a car to a niece or nephew, submit Certified Statement Form #VR-299.
Lien Release: If the vehicle's title shows a lien but you've since paid it off, the receiver of the automobile will need a Notice of Security Interest Filing form.
Proof of Relationship: If the vehicle's giver and receiver's last names are different, official proof of their relationship is required.
Maryland Safety Inspection Cerfiticate: Most gifted vehicles require inspection to be registered. Exceptions include gifting a car to an immediate family member and gifting models that meet current safety guidelines.

Which Is Better: Gifting a Car vs. Selling for $1?

Many of our DARCARS 355 customers have questions about gifting a car vs. selling for $1. The answer in almost every scenario is that gifting is more beneficial than selling, even for small amounts like $1 or $5. Here's why:

Gifting a car to a family member lets you avoid paying excise taxes.
Formally gifting a car vs. selling for $1 provides clear documentation of ownership change, which can simplify insurance paperwork.
Selling your vehicle to family for $1 or some other nominal amount instead of gifting it could force the recipient to pay tax on the car's fair market value.
Gifting a car to a family member frees you to shop our new Toyota inventory and find an even better daily driver for yourself!

For clarification or more information about gifting a car in Maryland, reach out to our dealership or contact the Motor Vehicle Administration Customer Service Center. If you're looking to sell your car rather than gift it, click here for more information on transferring vehicle ownership.

DARCARS 355 Toyota of Rockville Helps You Gift and Shop

Now that we've discussed the selfless act of how to gift a car to a family member, it's time to give your own needs a little attention. Explore Toyota model research hub to find a sedan, truck, or SUV that catches your eye.

Not only do we stock hundreds of new and used models, but we also give Maryland drivers our most competitive Toyota deals and specials. Start your new-to-you vehicle search online today. You finding your next car will complete the circle of gifting a car to a family member – everybody wins!