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I am trying to break free and be an independent self, and I couldn't find a similar topic like this on the Exchange.

[Virginia] My parents got a Nissan Altima 2015 and I have slowly been putting money in a joint account. ~$2o,ooo. My parents took it out and did whatever they wanted to do with that money.

I recently asked for the title and am trying to begin the transfer process. Perhaps I am confused by my family's cultural norms and the disconnect between the 'payment time' (over the course of several months) and the 'transfer time' (now...?).

Does this still count as a purchase? Or as a GIFT?

I have read the DMV site, as well as some other blogs (GIFTS are < $14,ooo), but I'm still hesitant to sign the wrong forms and have it bite me in the back later as none of them rang true to my situation.

EDIT: Attempting to add more information in a summarized list:

  • $20K is about how much they paid for the NEW car
  • I have been using it this entire time (part of my disconnect with it being a 'sale')
  • KBB lists it as about 9.5k trade in value
  • You've had and used the car the entire time? And does the $20,000 cover the full amount of the new car price, less, or more? – Joe Dec 20 '17 at 23:10
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    Also, if you're doing the title transfer and you are filling in the purchase price of the vehicle, you should be aware that the fair market value near that 'gift' definition. You also need to clarify what you're asking in your question. (This is a Q&A site, a good A requires a good Q.) – Xalorous Dec 20 '17 at 23:12
  • Hi, Joe! Thank you for your time! I have used it the entire time (that's also part of my disconnect), and $20k is about the price they paid for it (give or take 1-2k). Right now KBB says 9K trade in. – Shepherd Dec 20 '17 at 23:14
  • Rereading your question, you may be asking specifically how to fill out the title transfer form in Virginia. There I don't know that I can be of help: my answer is primarily from a federal tax perspective. I would honestly just ask the DMV how to fill the form out; they'll be able to tell you, as I'm sure this is not the only case in the state... – Joe Dec 20 '17 at 23:33
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It doesn't sound like there is any sort of "gift" in this particular transaction, with the exception of two things.

If the amount you ultimately gave your parents is less than the original paid amount for the car, then that difference would be a gift on their part to you.

What this sounds like is a loan arrangement, where your parents paid up front (and held title, as lenders sometimes do) for the car, and you used the car and paid them back over time. As such, neither the money they paid for the car nor the money you paid them are gifts (again, unless they accepted less than full value back). However, they are expected to charge you a reasonable interest rate on any loan; if they accept only 100% of the total value back, then that forgone interest is also a gift.

So if the car cost $22k, and you paid then $20k over three years, you'd say they gave you a gift of ($2k) + (3% * 20k) + (3% * 14k) + (3% * 7k), or whatever the yearly amounts remaining were, calling 3% a reasonable interest rate; a bit over another grand. So a bit over $3k in all.

Fortunately for you both, this is well under the maximum gift amount ($14k per parent, so $28k, doubled again if you're also married) so you don't have to worry about gift/estate taxes for the gift.

As for the title, you need to pay whatever title transfer tax is appropriate in your state. It shouldn't count as a sale though (so no sales tax) since you were borrowing the money for it.

  • Hi, Joe: Thank you for your time in explaining the situation in a legal term. It definitely clears up some apprehensions I have and I will take your advice to talk to the DMV. Much appreciated! :) – Shepherd Dec 20 '17 at 23:35

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