What Is a Bill of Sale for a Gifted Car?
A bill of sale for a gifted car documents the transfer of ownership when you give a car to someone without payment. Even though gifting a car isn’t technically a “sale,” you must still provide a bill of sale.
This document includes the names of both parties, the car’s details, and a note that the transfer was a gift. It’s required for title transfer at the DMV and also protects the giver by proving they’re no longer responsible for the vehicle.
What Are the IRS Rules for Gifting a Car?
The IRS doesn’t require a bill of sale for a gifted car, but it can help show the car was given, not sold. This is especially useful if questions come up later, especially for higher-value gifts. If the car is worth more than $19,000 in 2025, the person giving it must file Form 709, the Gift Tax Return.
That doesn’t mean they’ll owe tax. Most people don’t, since the IRS allows a large lifetime exemption. The person receiving the car doesn’t need to report anything. All the paperwork is handled by the giver.
How to Write a Bill of Sale for a Gifted Car
Protect your good deed with the right paperwork. A bill of sale for a gifted car shows the transfer was intentional, legal, and by the book. Here’s how to write one.
1. Verify Car Ownership
Before you gift a car, confirm that you fully own it. The vehicle must be paid off with no outstanding loans or liens. The title should be in your name and in your physical possession to allow a legal transfer. Without that, the DMV won’t process the ownership change.
2. Make Sure the Car Passes Inspections
Check if your state requires a safety or emissions inspection. This is often needed before the car can be registered. It’s especially important if the car is coming from out of state. Skipping this step could delay the transfer.
3. Check Your State’s Rules
Each state has its own rules for gifting a car. Some waive taxes when the transfer is between close family members.
In North Carolina, for example, there’s no highway use tax for gifts between parents, spouses, or stepparents, under NC Gen Stat § 105-187.6. And if you live in California, the DMV requires a Statement of Facts that includes the car’s estimated value.
4. Use the Right Bill of Sale
Start with the correct form. Some states have an official bill of sale for gifted cars, so use that if it’s available. If your state doesn’t provide one, you can use Legal Templates’ free template. It covers everything you need, including the odometer reading, terms of sale, and more.
Are You Selling Your Car Instead of Gifting It?
If you’re selling your car instead of gifting it, you might also need a promissory note for a car sale to document repayment terms.
5. Gather Your Details
Before you start, make sure you have your full name and addresses ready. If you and the recipient have different last names, some states might ask for proof of your relationship.
6. Describe the Car
Make sure the description leaves no room for confusion. Include key info like:
- VIN
- Mileage
- Overall condition
- Make
- Model
- Year
- Color
If there are any known issues or recent repairs, mention those too. It covers your bases if questions come up later.
7. Make It Clear It’s a Gift
State that the car is being transferred for $0 and without payment. Some states may still ask for the car’s fair market value, even if it’s a gift. Including it helps keep the paperwork clear and legally sound.
8. Sign and Keep a Copy
Once the bill of sale is complete, both you and the recipient need to sign it. Some states also require a notary or witness. Keep a copy for your records. You may need it for taxes, insurance, or registration.
9. Coordinate Insurance
The recipient should have coverage in place right away. Once the title transfers, your policy won’t cover the vehicle anymore. A gap in coverage can cause problems if anything happens during the switch. Make sure you’re both clear on who owns the car at each stage.
Gifted Car Bill of Sale Template
You’ll find a sample bill of sale for a gifted car below. When you’re ready, you can download and complete the printable version as a PDF or Word file.
