Gifting a Car vs. Selling for $1 in Ohio
Gifting a car or selling it for $1 in Ohio are both similar processes with one major difference. Click here for more.
Written by Brittni Brinn
Reviewed by Jessa Claeys
Selling a car for $1 in Ohio will follow the same process as a private vehicle sale. Gifting a car in Ohio, however, involves one major difference—you’ll fill out “0” where the vehicle title transfer asks for the price. The new owner is exempt from paying sales tax on the gifted vehicle.
If you’ve got a car you’re hoping to give a friend or family member, you may be wondering if it’s better to sell the car to them for a buck or gift the car outright.
Here’s a handy guide to gifting a car in Ohio—and which option may work out better for the new owner! Plus, we’ll outline the steps for gifting a car properly and some tips for reducing the hassle of transferring a gifted car to the new owner.
Is it better to gift a car or sell it for a dollar in Ohio?
The gift of a car can save your teen some money. Or, it can enable you to get rid of an old vehicle and help out a friend while doing it! Whether you’re gifting a new or used vehicle in Ohio, there are definitely benefits of gifting a car over selling it to the new owner for a dollar.
The deciding factor is taxes. If you sell a car to a new owner, even for the lowest price possible, it will still be subject to Ohio’s car sales tax—5.75%. Depending on where you’re located, county taxes of 2% may also apply.
You may have heard of a gift tax—depending on the value of the gift, gift tax can range from 18% to 40%. As of 2023, federal law outlines that you can gift someone an item up to $17,000 without having to pay taxes. So, if the car you’re gifting is valued less than that, you won’t have to worry about paying gift tax.
Ohio doesn’t have a gift tax of its own, so you’ll only have to follow the federal gift tax rules if you choose to gift a car.
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How gifting a car works in Ohio
Want to make sure you check all the boxes for properly
gifting a car in Ohio
? Let’s get into the details.1. Pay off any outstanding loans
First, you’ll want to make sure you’re not gifting a bunch of debt along with the car. To prepare your car for the new owner, call your lender/lienholder to resolve the outstanding
car lien
before you give away the vehicle.MORE: How to pay off your car loan faster
2. Negotiate the terms of the gift
You may want to surprise someone with a new car—but talking about the gift with the new owner first is an important step. A car is a major financial responsibility, and you’ll want to give them an idea of the car’s continuing costs of ownership including:
It’s important to discuss who will be covering each of these costs, as well as the title transfer and vehicle registration fees involved in the gifting process (more on certificates of title in a minute).
Here’s an overview of what the new owner can expect for ongoing car expenses in Ohio:
- Vehicle maintenance costs in Ohio: $354 per year
- Fuel costs in Ohio: $1,347 per year
Of course, the model of the vehicle, the location, and the new owner’s driving record will influence how much they end up paying to drive their new car.
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4.7/5 rating on the App Store | Trusted by 5+ million customers and 7 million cars4.7/5 app rating | Trusted by 5M+ drivers3. Create a bill of sale
Even if you’re giving a car to a family member, you still have to write a bill of sale to document the new ownership. Although there is no money changing hands, it is still a transaction that needs to be recorded.
You can find a bill of sale template through your local Bureau of Motor Vehicles (BMV). The bill of sale must include the make, model, year, and vehicle identification number (VIN) of the gifted car. Make sure that you also include the full names, addresses, and signatures of both yourself and the new owner, plus the date, the car’s odometer reading, and the license plate number.
The bill of sale should have a space to indicate the sale price, where you can write “0.” The new owner may need to present this document when they register the vehicle to their name, so make sure that you fill one out together.
4. Transfer the car title
While a bill of sale indicates that your car’s ownership has been reassigned, transferring the vehicle title is another essential step. The vehicle title is an ongoing record of your car’s history and lists who is legally responsible for the vehicle.
To complete the vehicle title transfer, visit your local BMV office. The process for transferring a title in the case of a gift is pretty much the same as buying or selling a vehicle in Ohio.
To transfer the vehicle’s title to the new owner, you need to:
- Complete the vehicle title assignment section of the title certificate
- Fill in the new owner’s name and address
- Mark the vehicle’s purchase price (“$0”)
- Note the odometer reading
- Provide a notarized signature on the vehicle title
- Present a valid form of ID
- Pay the $15 vehicle title fee and $31 registration fee
Both you and the new owner will have to sign the title to transfer ownership. You should complete the vehicle title transfer within 30 days.
MORE: Title transfer in Ohio
5. Purchase insurance
The giftee will also need to provide proof of insurance to register the vehicle. Ohio requires all drivers to carry liability insurance, but depending on the car, the new owner may want to look into additional coverage.
If they already have an insurance plan for a previous vehicle, they can add the new car to their existing plan.
What to keep in mind when gifting a car in California
If gifting a car is the way to go for you and the lucky new owner of your car, here are some things to keep in mind.
- Want to gift a brand-new car? It can save you a lot of hassle if you take the giftee to the dealership with you and involve them in the purchase. That way, you won’t have to jump through so many administrative hoops after buying the car.
- Gifting a car to a lucky teen in your family is generous, for sure—but remember to consider the high insurance premiums that often apply to young drivers.
- If you decide to leave your car to a friend or family member in your will, you’ll need to fill out a Transfer on Death (TOD) form and have it notarized.
- Donating a car in Ohioand gifting a car are two different things and involve different steps.
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Do I have to pay sales tax on a gifted car in Ohio?
You will not have to pay sales tax on a gifted car in Ohio. However, the federal gift tax may apply to cars valued over $17,000.
How much does it cost to transfer a car title in Ohio as a gift?
In Ohio, it will cost $15 to transfer a vehicle title, plus a $31 registration fee.
