is tax-free as long as it is to an immediate family member and the proper paperwork is completed. Fees for registration and title transfer still apply, and a sales tax of about 7% will be applied if it is a gift to a non-family member.

Giving someone the gift of a car is an incredibly generous thing to do and is sure to make everyone involved happy. But it’s a little more complicated than just hitting the store and picking out a present—there’s paperwork to be done and fees to be paid, and every state has different regulations around gifting a car.

Fortunately,

Jerry

is here to help make the process go smoothly! Read on for everything you need to know about gifting a car in Rhode Island. From what forms you’ll need to determining if there will be taxes owed, Jerry has you covered.

RECOMMENDED

Compare auto insurance policies

No spam or unwanted phone calls · No long forms

ZIP Code

Find insurance savings

How to buy a car as a gift in Rhode Island

You can only give a car to someone if you own it free and clear—any loans have to be paid off first. The easiest way to buy a car as a gift for someone is by bringing them to the dealership with you so that they can participate in the shopping process.

If you want to give a new car to someone who can’t afford to purchase or finance it themselves, then having them with you for the financing and shopping process will ensure that they get the car that they want, and head off any future financial or legal tangles.

Key Takeaway You need to possess the title before you can give a car as a gift, so bringing the lucky recipient to the dealership with you is the best way to purchase a car as a gift.

MORE:

How to buy a new car

How to gift a used car in Rhode Island

If you own a car that you want to give as a gift, the best way to go about it is by transferring the title to the recipient. It doesn’t have to be an older car—if it’s a newer car that you’ve purchased outright or just paid off, then you can gift it.

If the car is a gift to a family member, then it is tax-exempt. You will need to complete and submit a Tax Exempt Certificate (T-333-1) and a Gift of Motor Vehicle Affidavit Form (SU 87-65).

If your recipient is not a family member, then the car is subject to a sales tax of roughly 7% of the car’s value as determined by the

NADA clean retail book value

. You will need to fill out a Sales Tax Form (T-334) to report and pay this tax. These

tax forms

can be found on the Rhode Island DMV’s website.

Negotiate the terms of the gift with your recipient

Once everyone has enjoyed the excitement of the moment, take some time to sit down and discuss the particulars of the gift process with the recipient. Even given as a gift, a car comes with costs and financial responsibilities.

In Rhode Island, there is a $52.50 fee to transfer a title. Car registration is based on weight, so check the DMV’s

Registration and Title Fees

page to calculate what will be due.

Make sure you discuss who is going to pay for the title and registration, taxes (if applicable), insurance, fuel, and any other associated costs. You want to make sure that your lovely gift doesn’t end up being an unexpected financial burden.

Here’s a table of some of the costs you should discuss with your recipient:

Cost	Rhode Island average
Title transfer	$52.50
Registration fee	varies by weight
Insurance	$2,183 (minimum only) $2,312 (full coverage) per year
Maintenance	$1,100 per year
Fuel	$800 to 1,200 per year

Record the gift with a bill of sale

Even though nothing is being bought or sold, the transaction still needs to be recorded with a bill of sale to keep things niiiice and legal. This should include the nature of your relationship with the giftee and all pertinent information about the car (make, model, VIN, etc). The “sale” price can be listed as zero.

Make sure you and your recipient both sign the bill of sale and include it with the other tax and transfer paperwork.

Transfer the vehicle title

If the car is a model year 2001 or newer, then will need to be in possession of the title and get it transferred over. If it’s older than that, you’ll just need the previous registration.

Fill out and sign an Application for Registration (TR-1) and use the registration document checklist to make sure you’ve got all the correct paperwork and the proper tax forms for the situation.

Pro Tip As of September 2021, Rhode Island began requiring a
VIN check
when registering all vehicles that are from 2001 or newer. This can be done at a local police station.

Whew! Okay. Now that the paperwork is sorted out, make an appointment at the

Rhode Island DMV

office of your choice to pay the fees and complete the transfer.

Purchase Rhode Island liability insurance—or full coverage

The final step? Make sure that the car has insurance that meets

Rhode Island’s car insurance requirements

. Once that’s done, your giftee is free to drive across the state! We’ll wait here…it should only take about 15 minutes, right?

MORE: Title transfer in Rhode Island

“I can’t thank the
Jerry
app enough! They saved me $160 a month, and I didn’t even have to talk over the phone. They took care of everything through text.” —Travis Y.

How to find affordable car insurance in Rhode Island

Whether it’s a gift to someone else or all for you,

Jerry

can help you save big on car insurance costs in Rhode Island.

Unlike the car gifting process, using Jerry to shop for

car insurance

is quick, easy, and requires no paperwork! Download the app, enter a little bit of information, and pick from competitive quotes from some of the nation’s top insurers. You can even get help canceling your old policy.

The Jerry app might not come with a big red bow, but the average user saves almost $900 annually! You can definitely buy enough ribbon to go on that gifted car with that.

Let Jerry find your price in only 45 seconds

No spam · No long forms · No fees

Find insurance savings

Do you have to pay taxes on a gifted car in Rhode Island?

If the car is a gift to a family member, you don’t have to pay taxes, but you do need to submit some paperwork. Otherwise, there will be a roughly 7% sales tax on a car gifted to a non-family member.

Is it better to gift a car or sell it for $1 in Rhode Island?

Gifting a car is the easiest and most legitimate route to take. Selling it for $1 won’t save you any money on taxes, and will likely create more paperwork.

Reduce your monthly car payments in minutes?

Find out if Jerry can reduce your payments by an average of $150/month

Check your rate!