Gifting a car for Christmas is an awesome surprise, but there are certain steps you need to take to make sure it’s done properly. Here is our guide to gifting a car to a loved one this holiday season. 

There are several reasons you may decide to gift a car to a family member or loved one. It could be a Christmas surprise, complete with a big red bow. Perhaps your child is receiving their driver’s license. Maybe you’re a grandparent who can no longer drive. Or maybe a good friend is struggling financially and you want to help them out. 

Regardless of why you are gifting a car, there are a few things you need to know before you put a bow on it and put your loved one behind the wheel. Read everything you need to know about gifting a car for Christmas, then find that perfect gift on KSL Cars

You Need to Own the Car Free and Clear

You cannot gift a vehicle unless you own it outright. If you still owe money on the vehicle, you will need to pay off the loan and ensure the title is free and clear from any liens. If your vehicle is paid off and you have yet to receive the title, contact your lender and local DMV about getting the title sent to you.

Consider the Recipient’s Financial Circumstance

Gifting a car is a very kind gesture, but it can be a financial burden for the recipient if the car is a bad fit for their needs. For example, a large, gas-guzzling SUV might be the wrong choice for a single person making minimum wage, and an expensive, luxury vehicle might be too much to take on for someone younger. Make sure the person can pay for fuel, insurance, maintenance and repair costs. Otherwise, the gift of a car could become less of a gift and more of a problem.

The giftee may have to pay a “gift tax,” but only in rare circumstances. If you gift a car that is worth more than $15,000 the giftee will have to file a federal gift tax return, but they won’t have to pay the gift tax unless they have exceeded their lifetime gift exclusion, which is $11.78 million in 2021.

Draft a Bill of Sale

It’s always best to make the gift official and drafting a bill of sale can help make it so. Neglecting to fill out a bill of sale between the two parties can, in some circumstances, have the previous owner still liable for the car. The bill of sale should include the make and model of the vehicle, the purchase price of the vehicle (if the car is being gifted you can write “gift” for the purchase price), the VIN, the odometer reading, your signature and the signature of the person receiving the car as a gift. 

Transfer the Title 

This step is simple but essential. Make sure your title is transferred to the new owner. By doing so you are releasing yourself from ownership of the vehicle and placing it under the ownership of the person you are giving it to. For this to occur you need to fill out the title with the “buyer’s” information, fill out your information and sign. Then you, or the giftee, will need to take the title to the DMV, pay the fee and get the title submitted for transfer to its new owner. 

Verify the Recipient is Insured

Don’t forget about making sure the giftee is insured. If the new owner already has car insurance, it’s as simple as contacting their insurance provider or agent, providing them with a few details about the vehicle and its intended usage and arranging the coverages they desire. Once their insurance is confirmed, the giftee is ready to enjoy their Christmas surprise!

Find the car you would like to gift today on KSL Cars! With over 46,000 cars to browse, the perfect drivable gift is on KSL Cars right now. 

About the author: Having owned everything from a DeLorean to an E46 BMW M3 and a Toyota Land Cruiser, Jason Bell is a lifelong car enthusiast who loves sharing his passions as a teacher, writer, speaker and social media manager. Contact him at for comments/questions, or just to say "hi."