Please help - How to transfer ownership of a car

Discussion in 'After Hours Lounge (Off Topic)' started by Carlo Medina, Feb 18, 2005.

  1. Carlo Medina

    Carlo Medina Executive Producer

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    The Background: five years ago I needed to buy a car. Being just out of college and having not handled my finances well, I had spotty credit [not terrible, just spotty], but my sister had impeccable credit. She agreed to purchase my car for me, while I made all the payments (and I mean every cent, including the down). In exchange, rather than get shafted with the 8-10% loans I was being offered, I got 1.9%, not a small difference considering the size of the loan. I realized that I would not reap any benefits on my credit history, but I was working to clean that up anyway (and it has been spotless since) and have no regrets.

    The present: you guessed it, 60 months are about to pass and on March 1 I will make my final payment. From what I understand, the loan company will send the pink slip once payment is made, and it will of course be under my sister’s name.

    Now my question: Is there an easy, painless way to transfer ownership from her to me? I’ve never done anything like this before, and I don’t know if it’s as easy as just walking into a DMV and filling out a form. But just in case what we’ve done isn’t kosher [though I can’t believe it was against the law], are there any hoops that I should jump through before pursuing this?

    Will there be any ramifications [legal or tax-wise] that people are aware of and would caution me?

    Any help will be greatly appreciated!
     
  2. RichardK

    RichardK Second Unit

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    Your sister will be mailed the actual hard copy of the title for the car once the last payment is cleared and all the red tape paperwork is processed. I think the bank that the loan is with will be the mailer.
    The title will be in her name unless you co-signed. If you co-signed I dont think you need to do anything cuz your name should(?)/may be on the title as well. More likely scenario is you go and get a title transfer form, fill out and pay a fee (in Texas, this is less than $50). Once that is done the title is transferred to your name and so is the car. All registration and insurance will now be yours 100% as well. I dont know about any tax issues associated with her giving/selling the title to you for next to nothing.. (gift tax, income tax etc...) Far as I know, this should be a rather painfree process...

    Anyone, please correct me if I have mis-written anything here.

    Enjoy owning!

    ps.
    I am doing the same thing for my brother right now...both of our names are on the registration, so essentially we both own the car. Once paid off, I dont think we will need to do any paperwork at all. -RR

    -Richard
    RICHUT96 (HTF2 member)
     
  3. Dennis Nicholls

    Dennis Nicholls Lead Actor

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    In general you may be liable for the full sales tax of a transfer of the used car between parties. California does not tax certain intra-family transfers but this may only work from parent to child etc., not from sister to brother. But I'm sure DMV will make you painfully aware of this tax liability if due. If you put down a rediculously low value at transfer, they may just look up blue book and send you a bill.

    Read all about it right here:

    www.dmv.ca.gov/vr/vr.htm
     
  4. Dennis Nicholls

    Dennis Nicholls Lead Actor

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    Ooops, too bad for you:

    www.dmv.ca.gov/pubs/brochures/howto/htvr1.htm

    "There are three primary differences between regular transfers and family member transfers:

    1. A regular transfer requires smog certification in most cases before the vehicle can be registered in the new owner's name. A family member transfer does not require smog certification (See Smog Certification section) if the vehicle is currently registered and the biennial smog inspection is not due.

    2. On a regular transfer, use tax based on the purchase price of the vehicle is due at the time of transfer. A family member transfer is exempt from use tax with the exception of a transfer between brother and sister who are not minors. A brother and sister transfer is exempt from smog certification regardless of age, unless a biennial smog is required.

    3. A regular transfer requires the department to reestablish the vehicle value (reclassify) to determine the appropriate Vehicle License Fee due. The license fee is based on the purchase price or current market value of the vehicle. A transfer between family members is exempt from reclassification of the vehicle value. "
     
  5. Carlo Medina

    Carlo Medina Executive Producer

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    Yeah I was wondering about that.

    This page on the DMV says that I guess I don't get that. How about a brother-to-brother sale? Or sister-to-sister? Give me a fricking break, Governator!

    It will be a gift, $0 sale, and since I've paid everything on it (including the original sales/destination tax, all registration/smog/etc costs), this just seems like a big old rip-off to me.

    Any idea on how to potentially avoid paying the use tax?

    The "Kelley Blue Book" site still says my car has an MSRP of around $9500, which means if use tax = state tax, I could pay between $736-$783 (the higher number is if Los Angeles county tax is added to the state tax).

    If this can't be avoided (and I sure as heck am not going to pay ~$800 after just completing my car payments) is there anything wrong with just driving it around as is? I'm fully insured to use the car, and I have a great relationship w/ my sister so she's not going to try and pull the car from me. It's just a title and it would have been nice to have my name on it (after all the hard work of paying it off) but if it's going to cost nearly 8 C-notes for that honor, I can do without it. [​IMG]
     
  6. Carlo Medina

    Carlo Medina Executive Producer

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    I see Dennis and I were posting at the same time...

    The only other thing I can think of, and I don't know if there's a limit on number of times a car can change hands: my sister transfers it to my parents, who then transfer it to me. Seems like that should work, too. What a pain in the ass.

    If anyone sees a danger in just keeping it under my sister's name, please speak up, because that's how I'm tempted to just keep it as. This isn't the last car I'm going to buy (will probably buy again around 2010) so I'm re-evaluating the need to have my name on the title, especially at that price.

    I'm a good boy, I pay all my taxes, don't use loopholes, etc. But to me, that whole "exempt...EXCEPT for bro-sis transfers!" just really chaps my hide. I can't even think of a good reason to have that.
     
  7. Dennis Nicholls

    Dennis Nicholls Lead Actor

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    If you claim the car is a "gift" (zero value) from your sister, you may still be liable for state and federal income tax on the actual value of the gift. There are some exceptions for gift tax too for family members. IIRC it was a $10K exemption for parent to child transfers. Here's some light reading for you:
    www.irs.gov/pub/irs-pdf/i709.pdf

    "We're from the government, and we are here to help you." [​IMG]
     
  8. Ken Chan

    Ken Chan Producer

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    So that's fair(er). Unfortunately, that means you have to pay. Transfering to your parents first would seem to be evasion, unless your parents actually "use" the car for some time. But then again, IANAL (I am not a lawyer).
     
  9. Matt Butler

    Matt Butler Screenwriter

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    A post here made me think: I had co-signed for a car for an ex a few years ago. My recent credit report told me its close to being paid off. Will the title have my name on it and how do I get it off if so? I have had no contact with said ex-g/f in some time and have no idea how to find her.

    And No I will never do something this stupid again.
     
  10. Carlo Medina

    Carlo Medina Executive Producer

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    Matt, www.dmv.ca.gov - I think since you co-signed, BOTH of your names will be on there, and there's a form you can fill out to take your name off, plus a small fee (like $15). My problem is that I didn't co-sign because that wouldn't have qualified us for that ultra-low APR on the loan.

    Unfortunately I think that since both names are on there, in order to remove your name you may also need her signature (consent) as well. I think you'll have to track her down.
     
  11. Shane Martin

    Shane Martin Producer

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    I don't think the government sees it that way though. They don't know you bought it and then if its a gift you are liable for the taxes on a gift..

    After she signs the title over via the tag office, you'll have to pay title transfer fee at that point whichever that may be and then you will likely owe the sales tax. Unless you can find a loophole, I see you paying.
     
  12. Bill Cowmeadow

    Bill Cowmeadow Second Unit

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    Take your sister to the DMV and have her add your name to the title and amend it to read 'Her name and/or Your Name'
    Problem solved.
     

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