Gifting Car Across State? Need advice on steps to take...

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So I am NY and planning on gifting a car to my daughter who is moving to IL. She's currently under my insurance policy. What do we have to do in terms of title transfers, getting new insurance for her, new license, registration, new plates, etc and in what order? She needs to be able to drive relatively soon over there for work. I'm thinking of just letting her take the car over first and then figure it all out, but am not sure if that would pose a problem for the title transfer if it is done after she takes the car.

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My in-laws just did this under my guidance from WA to AZ.

1) Sign the title over to your daughter
2) Have her go to the DMV to get an IL license and transfer the title (check first to make sure no inspections/emissions are needed prior to transferring)
3) Have her sign up for insurance in IL

You usually have about 30 days to get all of this done (in other words, hand her the keys and off she goes), but it is terribly simple.

In MI, you have 3 days to drive it home (not  commute to work) after the date the seller signed the title.
Then you have to take the title to a Secretary of State branch office, pay your title fee, license fee, and sales/use tax.
If the seller is your father, there is no tax.

I'd be surprised if IL lets you drive it to work for a month without registering it.
I'd definitely check to see if a family transfer is subject to use tax in IL, if it is, it might be better to sell it to her for a dollar than to give it to her.

Have her pull all the forms to see if you need to sign anything (other than the title).  Transfer tax is waived in most states if the transfer is a gift/transfer between family members. 

taxmantoo said:   
I'd definitely check to see if a family transfer is subject to use tax in IL, if it is, it might be better to sell it to her for a dollar than to give it to her.

If you write in the sales price as one dollar, they are going to look up fair market value and charge you tax on that.   

dcwilbur said:   Have her pull all the forms to see if you need to sign anything (other than the title).  Transfer tax is waived in most states if the transfer is a gift/transfer between family members. 
  While this is generally true, I've seen it where you must fully register the car in the state where it is currently titled -- otherwise state #2 may expect the sales/use/transfer/excise tax to be paid.

I'd definitely check to see what IL does as far as waiving taxes for gifts. I know with WA you need to provide a motorized statement that its a gift and they certainly don't just take someones word for it.

jerosen said:   I know with WA you need to provide a motorized statement ...
  I see what you (inadvertently) did there

Does NY allow you to give the car to your child without her having to pay tax? If so, you could do the transfer in NY and then after 3 months, she can title it in IL without paying any tax.

That may end up costing more since you are titling it twice, but gifting a car in one state and titling in another state without titling it in the first state might end up being more difficult, even if it could save one titling fee. Might not be worth the hassle.

meade18 said:   Does NY allow you to give the car to your child without her having to pay tax? If so, you could do the transfer in NY and then after 3 months, she can title it in IL without paying any tax.

That may end up costing more since you are titling it twice, but gifting a car in one state and titling in another state without titling it in the first state might end up being more difficult, even if it could save one titling fee. Might not be worth the hassle.

  Many states will only let your register a car in the state if you have a driver's license in the state.

stanolshefski said:   
meade18 said:   Does NY allow you to give the car to your child without her having to pay tax? If so, you could do the transfer in NY and then after 3 months, she can title it in IL without paying any tax.

That may end up costing more since you are titling it twice, but gifting a car in one state and titling in another state without titling it in the first state might end up being more difficult, even if it could save one titling fee. Might not be worth the hassle.

  Many states will only let your register a car in the state if you have a driver's license in the state.

I am assuming that the daughter still has a NY license and plans to get an IL license after she moves there.
Also, many states don't care if you have a license at all, let alone a license from that state, if you want to register a car.

Depending on how old the car is the tax may be a non-issue.
 

meade18 said:   
stanolshefski said:   
meade18 said:   Does NY allow you to give the car to your child without her having to pay tax? If so, you could do the transfer in NY and then after 3 months, she can title it in IL without paying any tax.

That may end up costing more since you are titling it twice, but gifting a car in one state and titling in another state without titling it in the first state might end up being more difficult, even if it could save one titling fee. Might not be worth the hassle.

  Many states will only let your register a car in the state if you have a driver's license in the state.

I am assuming that the daughter still has a NY license and plans to get an IL license after she moves there.
Also, many states don't care if you have a license at all, let alone a license from that state, if you want to register a car.

  If that's the case, then you usually would need to register the car in state A before registering the car in state B. Those 30- or 45-day temporary tags could result in state B wanting the daughter to pay sales/transfer/use/excise tax.

Found this for Illinois :

http://tax.illinois.gov/TaxForms/Sales/VehicleUseTax/RUT-5.pdf

"Exceptions
If one of the following exceptions apply,
the tax due is $15:
• vehicle is an estate gift to a
beneficiary other than a
surviving spouse
• vehicle is being transferred in
a business reorganization
• vehicle is being transferred
or purchased from a spouse
(including a party to a civil
union), parent, brother, sister,
or child"

jerosen said:   Found this for Illinois :

http://tax.illinois.gov/TaxForms/Sales/VehicleUseTax/RUT-5.pdf 

"Exceptions
If one of the following exceptions apply,
the tax due is $15:
• vehicle is an estate gift to a
beneficiary other than a
surviving spouse
• vehicle is being transferred in
a business reorganization
• vehicle is being transferred
or purchased from a spouse
(including a party to a civil
union), parent, brother, sister,
or child"

  It seems that use tax would be due unless the vehicle was titled in the daughter's name in another state for more than three months:

"If you originally purchased (or acquired by gift or transfer) your vehicle from an individual or other private party, you must use Form RUT-50 when you bring the vehicle into Illinois. If you had the vehicle titled in another state for more than three months, no Illinois tax is due, but you still must file Form RUT-50 to reflect that fact."
http://tax.illinois.gov/Individuals/SalesandRelated/cars.htm

does she have to get the car smogged?

stanolshefski said:   
meade18 said:   
stanolshefski said:   
meade18 said:   Does NY allow you to give the car to your child without her having to pay tax? If so, you could do the transfer in NY and then after 3 months, she can title it in IL without paying any tax.

That may end up costing more since you are titling it twice, but gifting a car in one state and titling in another state without titling it in the first state might end up being more difficult, even if it could save one titling fee. Might not be worth the hassle.

  Many states will only let your register a car in the state if you have a driver's license in the state.

I am assuming that the daughter still has a NY license and plans to get an IL license after she moves there.
Also, many states don't care if you have a license at all, let alone a license from that state, if you want to register a car.

  If that's the case, then you usually would need to register the car in state A before registering the car in state B. Those 30- or 45-day temporary tags could result in state B wanting the daughter to pay sales/transfer/use/excise tax.

I wasn't referring to a temporary registration in NY. I was referring to a normal title and registration. That's why I said it will end up costing more because it will have to be titled twice. But it might be easier in the long run. The important question in determining how much effort it is worth is how much is the car worth and what would the IL tax be if she ended up having to pay it.



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