What value does the IRS use for a gifted car?
Fair market value on the date of the gift, reflecting the specific car's age, condition, mileage, and options. For standard vehicles, a dated printout of the private-party value from KBB, NADA, or Edmunds matched to the exact configuration is generally sufficient evidence; dealer retail values are expressly not an acceptable measure.
When does gifting a vehicle require filing Form 709?
When total gifts to that recipient for the year exceed the annual exclusion: $18,000 for 2024 and $19,000 for 2025. Amounts above the exclusion normally reduce the donor's lifetime exemption rather than triggering tax, but the car's supportable fair market value is what determines whether the filing threshold was crossed.
Is a gifted car actually tax-free?
Not automatically. Federal gift tax rules apply to the giver above the annual exclusion, and many states charge sales or use tax on the car's fair market value when the recipient titles it. Texas, for example, computes tax on a standard presumptive value unless recognized guide documentation or a qualified appraisal supports a different figure.
Which gifted vehicles need a written appraisal?
Classic, luxury, or modified cars worth over $5,000, where generic guide values misprice the asset. A qualified appraisal documents modifications, options, condition, and comparable or auction sales; a recipient claiming a value well below a state's standard value may also be required to produce an appraisal to justify it.