Hi,

I'm selling my car and the buyer want me to "gift" the car. Are there any consequences on my part? I don't want to break any laws.

Thanks

 

He's trying to avoid paying taxes.

 

Yep.....taxes plain and simple. I Thought states had limited who can gift to who (i.e. Immediate family members) so technically it could be breaking laws to do so.

 

I wouldn't do it but I don't mine put down a reasonable selling price, ex. 18k for a '08 coupe.

 

what state are you in?

 

Many people I know have gifted cars to the buyer who they don't know. You can claim you sold the far for 1$ and he'll pay pennies in taxes. I don't know about where you live but here in Quebec for cars lesser than 10yrs old you get taxed on either selling price or black book value, the one that is greater than the other.

As far as gifting the car which is basically a transfer of ownership, not sure how that works. I think he'd be more screwed than you would be, if he'd want to sue you for whatever reason, he wouldn't get much $ since the car was a gift to him.

 

I think the while one buck bill of sale thing is state dependent.....pretty sure ct has done away with allowing it. You can gift to immediate family but I'm not sure about anyone else....check your states dmv website first

 

I am a tax consultant and can tell you that each year you can give any individual a tax free gift of up to $12,000 (I think the amount is higher for 2010/2011). Anything over the federal limit would force the GIVER to pay gift tax.

I cannot comment on the state tax consequences.

 

I sold my BMW few weeks ago for $12000...and the buyer wants it as a gift. I said i will put it as $1000.00 just to be safe. I don't know what are the laws in Georgia.

 

Each state is different but I saw this on yahoo when I was dealing with a car a last year and thought it was intresting.
QUoted from yahoo
"The easy way around this issue is to have two separate sales. Your friend sells the car for a few hundred dollars, and the buyer pays tax on that figure. The buyer also buys a collectible item (which could yesterdays newspaper) from your friend for the difference between the the "real" selling price of the car, and the listed price.

A sale of something that does not need to be registered is not a taxable event.

Price of car $5,000

listed selling price $250
Price of other item that the buyer also buys $4750

None of this is reported to the IRS, so there is no tax issue there

Some will claim that avoiding taxes is morally wrong. Others believe that the government takes too much money as it is, and any loophole that can be used to reduce the total amount of hard earned money confiscated by the government should be used.

My personal belief is that if you can reduce the tax amount, it is a good thing."

 

I'm thinking fraud. (Substance over form) Your state laws may vary?
If he / she is a close relative, or spouse, in some states it may be Use Tax free.
The DMV used to have an "index of values". In some states the buyer may have the option of the actual price paid or the value stated.
PS I didn't post this buzz kill. It was posted by Evil BLC-Bob.

 

I believe they are taking enough taxes from us anyway...i will try to save as much as i can without drawing any attention from IRS. That's just me though...

 

Thanks for all your advices. I'm in WA state. I want to help you the buyer but I don't want to be disadvantage. I loved my G and hate to let it go.

 

If you "gift" it to her with more than $13,000 in value you have to pay gift tax. And that doesn't vary state-to-state.

 

I never knew that info. Thanks for sharing it