# Parents may sell me their car artificially cheap. What are the tax and legal implications of this? **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [December 24, 2024, 9:09pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132 "2024-12-24T21:09:23Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![puzzlegal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puzzlegal/32/3827_2.png) [@puzzlegal](https://boards.straightdope.com/u/puzzlegal)\ **Post date:** [December 25, 2024, 3:18am UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/21 "2024-12-25T03:18:51Z")
> [@StGermain](#): > > SPV applies to motor vehicles purchased in _private-party_ sales that do not involve a licensed motor vehicle dealer. **This includes sales between family members, neighbors and others.** Ah. When my parents gave a car to me and my husband, they gave it just to me. Because the state i lived in at the time did the same thing with “book value” of the car, except they explicitly excluded sales to daughters and a list of other close relatives. So i didn’t have to pay the sales tax on the gifted car. ---
**Author:** ![puzzlegal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puzzlegal/32/3827_2.png) [@puzzlegal](https://boards.straightdope.com/u/puzzlegal)\ **Post date:** [December 25, 2024, 3:20am UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/22 "2024-12-25T03:20:12Z")
Anyway, as others have said, if it’s less than this year’s gift tax exclusion ($18k) the IRS doesn’t care and there’s no requirement to tell the feds anything. ---
**Author:** ![Shoeless](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/shoeless/32/7099_2.png) [@Shoeless](https://boards.straightdope.com/u/Shoeless)\ **Post date:** [December 26, 2024, 2:55pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/23 "2024-12-26T14:55:12Z")
> [@Kent\_Clark](#): > > > [@filmore](#): > > > > Between individuals in Texas, I thought the DMV used something like the Blue Book to determine a minimum price in terms of setting the tax value. Otherwise, people would say they bought the car for $1 to avoid the tax. > > That’s howe they do it in Missouri. It doesn’t affect the sales transaction at all, but if the state values the car at $17K, that’s how the property tax will be calculated. Yep, in Kansas you pay personal property tax on your vehicles when you renew your tags every year, and that is based on the state’s valuation of the vehicle. So you may only pay _sales tax_ on the $5000 you paid for the vehicle, but your _property tax_ every year is going to be based on the $17K or whatever the state says it’s worth. ---
**Author:** ![aceplace57](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aceplace57/32/3500_2.png) [@aceplace57](https://boards.straightdope.com/u/aceplace57)\ **Post date:** [December 26, 2024, 3:16pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/24 "2024-12-26T15:16:56Z")
My parents gave me my dads old Opal Kadet when I turned 16. It was my car, but the title and insurance weren’t put in my name. I was probably added to their insurance? I don’t remember. There was no discusion about additional taxes. Giving a teenager a used car was common in my generation. We didn’t cross the threshold to owe income tax with a part-time, after school job. My parents paid for college. That wasn’t taxed to me either. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 26, 2024, 3:25pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/25 "2024-12-26T15:25:02Z")
So if I understand you correctly, it was “yours” in the sense that you drove it but not legally? There would never be any sort of tax due in that situation. Although the OP mentions the IRS , the tax involved in the transfer of a car would be sales/use tax ( if there is such a tax in the state). Often gifts between certain relatives are exempt, and there may be provisions for below-market sales to relatives to pay on the actual price rather than book value - but a lot of states won’t charge me tax on the $500 the bill of sale says I paid you. They will charge me the sales tax on the market value of the car. ---
**Author:** ![aceplace57](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aceplace57/32/3500_2.png) [@aceplace57](https://boards.straightdope.com/u/aceplace57)\ **Post date:** [December 26, 2024, 3:30pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/26 "2024-12-26T15:30:28Z")
I was driving legally at 16. I was covered under my parents insurance. There wasn’t any reason to transfer the title while I still lived at home. I bought my own gas and paid for minor maintenance. My biggest expenses were replacing the alternator and battery. I drove that car at college. It was in the same state. I don’t remember when the title was transfered. Probably after I turned 18. ---
**Author:** ![Thudlow\_Boink](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thudlow_boink/32/320_2.png) [@Thudlow\_Boink](https://boards.straightdope.com/u/Thudlow_Boink)\ **Post date:** [December 26, 2024, 3:34pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/27 "2024-12-26T15:34:19Z")
Here in Illinois, my mother recently gave me her car, and IIRC when I went to the DMV(-equivalent) to transfer the title, they charged me a nominal $15 in lieu of sales tax. ---
**Author:** ![doreen](https://avatars.discourse-cdn.com/v4/letter/d/858c86/32.png) [@doreen](https://boards.straightdope.com/u/doreen)\ **Post date:** [December 26, 2024, 3:41pm UTC](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132/28 "2024-12-26T15:41:35Z")
> [@aceplace57](#): > > I was driving legally at 16. I was covered under my parents insurance. I wasn’t talking about whether you were driving it legally - my point is that your parents didn’t transfer the title to you when you turned 16 and you therefore didn’t actually own the car . Your parents still owned it which means no tax of any kind would be due as there was neither a sale nor a gift. What was understood in your family about who the car belonged to is a separate issue from who legally owned it . If the title was later transferred to you , there might have been tax then (depending on your state) [Previous page](https://boards.straightdope.com/t/parents-may-sell-me-their-car-artificially-cheap-what-are-the-tax-and-legal-implications-of-this/1012132.md?page=1)