Gifting a car to someone is a good way to avoid taxes and fees you would have to pay in a private sale. In
Illinois
, you have to follow the standard process of transferring and registering a title but with the extra step of filling out a RUT-50 form for tax exemption purposes. You will still have to pay a few minor fees for transferring the title, but they are minor compared to the money you’ll save.
Giving a car to someone is an exciting affair. It’s a gift that feels great to give and even better to receive, but you should be aware that there are a few extra strings attached. Each state has different rules and regulations governing the process.
That’s why
Jerry
, the
car insurance
super app, is here to guide you through the necessary steps. In this article, you’ll learn about how to give a car as a gift, mistakes to avoid, and the amount of money you’ll save by gifting instead of selling.
RECOMMENDED
Compare auto insurance policies
No spam or unwanted phone calls · No long forms · No fees, ever
How to buy a car as a gift in Illinois
It’s much easier to buy a car for someone than to give them one you already own. To that end, bringing the person to the dealership with you is the simplest, most streamlined way to gift a car. The person can pick out the car they like, and you will avoid any potential legal or financial issues.
Remember that a car with
liens
or outstanding payments cannot be given as a gift. All payments must be completed before the title can be transferred. In addition, cars can only be given as gifts to family members.
Key Takeaway If you’re giving a new car as a gift, make the process easier by bringing the recipient to the dealership with you. Remember, as well, that you can only gift a car to a family member.
MORE:
How to buy a new car
How to gift a used car in Illinois
If you plan on surprising your recipient with a gifted car, transferring a vehicle you already own is the easiest way. It doesn’t matter if it’s a beat-up Oldsmobile or a shiny new Honda, you can still gift it provided there are no payments remaining on the vehicle.
The process is the same for giving someone a car you don’t need anymore. Follow the steps listed below to legally gift a car in Illinois.
Negotiate the terms of the gift with your recipient
Once the excitement of your gift has died down a little, take a moment to discuss the finer details with your giftee. There will still be costs and payments to make, so it’s important to decide who will be responsible for them.
Illinois requires two fees to be paid for a
title transfer
: a $95 transfer fee and a $15 alteration fee (required to change the name on the title) for a total of $110. Residents of
certain counties
will also have to pay for a $20 smog check.
Between you and the recipient, decide who will pay for the title transfer as well as the costs for car insurance, maintenance, and fuel.
Here’s a table of the fees you and your recipient should consider.
Cost | Illinois average |
|---|---|
Title transfer | $110 |
Registration fee | $101 (plus $25 if you want to transfer plates) |
Insurance | $547 (liability only)$1,058 (full coverage) per year |
Maintenance | $1,186 per year |
Fuel | $2,466 |
Record the gift with a bill of sale
Despite the fact that the vehicle is being freely given as a gift, you still need to record the transaction with a
bill of sale
. An
Illinois bill of sale
acts as a permanent legal record of the exchange, protecting you from any possible unpleasantness in the future. Make sure it is signed by you and the recipient to demonstrate that you both agreed to the terms of the gift.
Transfer the vehicle title
The title transfer is the most important part of the car gifting process. It is what officially grants ownership of the vehicle to the recipient.
Both you and the recipient need to fill out and sign the vehicle title. You must also record the odometer mileage as well as the car’s VIN number on the title.
Next, you’ll have to contact the
Illinois Secretary of State offices
to obtain a VSD-190 title transfer form and a RUT-50 tax exemption form. Visit your nearest Secretary of State office or contact them over the phone at 800-252-8980 to obtain the forms, as they are not available online.
Once that is done, you have to visit an Illinois Secretary of State office in order to file the paperwork and pay the fees.
Purchase Illinois liability insurance—or full coverage
Before you send your giftee out on the open road, make sure their vehicle is covered with a
valid Illinois insurance policy
. After that, your recipient can enjoy both their new car and the peace of mind that comes with being properly insured.
How to find affordable car insurance in Illinois
Saving money on car insurance in Illinois is as simple as downloading the Jerry app. Once you’ve typed in your information, Jerry will generate a list of competitive quotes from the nation’s top insurance companies in less than a minute.
Comparing quotes is free and easy. If you find something you like, Jerry can even help you cancel your old policy!
You’ve learned how to give a car as a gift, now Jerry wants to give you the gift of savings. Jerry users save an average of $887 a year on car insurance.
“
Jerry
got me out of a bind! I bought a new car, and my existing insurance raised my prices and didn’t budge. Thankfully, Jerry got me an affordable rate without me waiting for phone calls all day.” —Felicia M.
Let Jerry find your price in only 45 seconds
No spam · No long forms · No fees
FAQs
FAQs
How do I transfer a gifted car title in Illinois? ›
Title transfer if gifting a car to a family member
You need to sign the title and give it to your family member. The family member then needs to submit an Application for Vehicle Transaction(s) (VSD 190) within 20 days to get the title in their name and must file Form RUT-50 and pay any applicable taxes.
Yes! You can gift a vehicle to a relative. In order to gift a vehicle to a family member, you will follow the same steps as a standard vehicle title transfer process, except for the fee tax that is a set amount. The vehicle title transfer process is handled by the Illinois Secretary of State offices.
Is it better to gift a car or sell it for $1 in Illinois? ›It doesn't actually make a difference whether you're selling a car for $1 or gifting it, as transferring a vehicle title to your recipient will require you to pay taxes in Illinois either way.
How do you write a gift letter for a car? ›How do you write a gift letter for a car? The gift letter should describe the vehicle that is being gifted. Example: \u201cI, (your name), gift to my friend, (friend's name), the following vehicle: Year, Make, Model and VIN.
Do I have to pay sales tax on a gifted car in Illinois? ›You typically have to pay taxes on a car received as a gift in Illinois. You will need Form RUT-50 to report the gift. You may qualify for a tax exemption if: The car was an estate gift for a beneficiary (not a surviving spouse).
Does car title transfer need to be notarized in Illinois? ›Is the Illinois title required to be notarized? No.
How much does it cost to transfer a car title to a family member in Illinois? ›| Cost | Illinois average |
|---|---|
| Title transfer | $110 |
| Registration fee | $101 (plus $25 if you want to transfer plates) |
| Insurance | $547 (liability only) $1,058 (full coverage) per year |
| Maintenance | $1,186 per year |
The title transfer process in a private sale is quite simple if both parties are present and the paperwork is ready. It's recommended you request a duplicate title if you're having trouble locating the original or if it's been damaged beyond use. You must get the vehicle registered else you cannot legally drive.
How does being gifted a car affect taxes? ›Do you have to pay taxes on a gifted car in California? No! Under California law, you're not required to pay use tax on a vehicle you receive as a gift.
How do I avoid gift tax? ›- Respect the annual gift tax limit. ...
- Take advantage of the lifetime gift tax exclusion. ...
- Spread a gift out between years. ...
- Leverage marriage in giving gifts. ...
- Provide a gift directly for medical expenses. ...
- Provide a gift directly for education expenses. ...
- Consider gifting appreciated assets.
How does gift tax work in Illinois? ›
Illinois Gift Tax
There is no gift tax in Illinois. There is a federal gift tax that applies on gifts worth more than $15,000.
You can give up to the annual exclusion amount ($16,000 in 2022) to any number of people every year, without facing any gift taxes or filing a gift tax return. If you give more than $16,000 in 2022 to someone in one year, you do not automatically have to pay a gift tax on the overage.
Is a handwritten letter a good gift? ›Any gesture of affection is lovely, but to really remain in your sweetheart's mind and heart for more than five minutes—maybe even for a quarter century or more—write him or her a handwritten letter. According to a 2011 national survey of women ages 18 to 70, such a letter is the most sought-after romantic gift.
What should a gift letter say? ›A gift letter must contain the donor's name, the gift's value, confirmation that the gift is not to be repaid, and the donor's signature.
How do I transfer my car to a family member in Illinois? ›Any transaction involving the transfer of a motor vehicle from one person(s) to another must be accompanied by a completed Tax Form RUT-50 (Private Party Vehicle Tax Transaction).
Can you do a title transfer online in Illinois? ›The Electronic Registration and Title (ERT) System allows you to complete and print an Application for Vehicle Transaction(s) (VSD 190) online. Alternatively, you may obtain Title and Registration applications by visiting the nearest Secretary of State facility or call toll-free within Illinois: 1-(800) 252-8980.
What documents are needed to transfer car title in Illinois? ›How to Transfer a Car Title in Illinois. After you purchase a vehicle in Illinois, simply bring your documents to WSCE. All you'll need is the title, the bill of sale, your identification, and proof of residence.