Yes, you can absolutely donate a car to another person, whether it's a family member, friend, or even a stranger. The process is more straightforward than donating to a charity, but it requires careful attention to legal and financial details to ensure the transfer is complete and protects both parties. The core steps involve signing over the vehicle title, handling any outstanding loan, and understanding the tax implications, which are different from a charitable donation.
The most critical document is the vehicle title. You'll need to sign the title over to the recipient, and both of you will likely need to visit your local Department of Motor Vehicles (DMV) to officially transfer ownership and update the registration. This step is non-negotiable; simply handing over the keys and the signed title is not enough to legally complete the transaction. If there is an existing loan on the car, you must pay it off with the lender before you can transfer the title.
Unlike donating to a registered 501(c)(3) charity, giving a car to an individual does not qualify for a federal tax deduction. The IRS considers this a personal transfer, not a charitable contribution. However, if the car's value exceeds the annual gift tax exclusion amount ($18,000 for 2024, as set by the IRS), you may need to file a gift tax return, though you likely won't owe any taxes unless you exceed your lifetime exemption. It's a good practice for both parties to sign a simple bill of sale, even for a $1 sale or "gift," to create a paper trail confirming the date and terms of the transfer. This document can be invaluable for the recipient at the DMV and for your own records.
| Consideration | Key Action | Important Note |
|---|
| Title Transfer | Sign over the title and visit the DMV with the recipient. | This legally finalizes the change of ownership. |
| Outstanding Loan | Pay off the loan in full before the transfer. | The lender holds the title; you cannot donate a car you don't fully own. |
| Tax Deduction | Not applicable for gifts to individuals. | Tax benefits are only available for donations to qualified charities. |
| Gift Tax | File IRS Form 709 if the car's value exceeds $18,000 (2024). | This is typically a reporting requirement, not an immediate tax payment. |
| Bill of Sale | Draft a document stating the car is a "gift" or sold for a nominal amount. | Protects both parties and simplifies the DMV process. |
| Smog/Safety Cert | Check your state's requirements; the recipient may need a new inspection. | Varies significantly by state. |
| Insurance | The recipient must secure their own insurance policy before driving away. | The car cannot be legally driven under your policy after the transfer. |
