The holiday season, a birthday, graduation, or simply the desire to help someone you love can all be good reasons to give a vehicle as a gift. Whether you are giving an older car you no longer need to a family member or purchasing a vehicle for someone else, there are several important legal and financial considerations to keep in mind.
Gifting a vehicle is more than simply handing someone the keys. The vehicle must be properly transferred to the new owner, and the recipient will need to take care of title, registration, insurance, and other expenses associated with owning the vehicle.
Here is what you need to know about gifting a car in Indiana.
Before giving someone a vehicle, consider whether they can afford the ongoing costs of ownership.
Even if the vehicle itself is free, the recipient may still be responsible for expenses such as:
A vehicle may be a generous gift, but it is important to make sure the recipient can realistically afford to keep and operate it.
Attorney Caleb Fleschner states, “Giving someone a vehicle can be a meaningful way to help a family member or friend, but it is important to remember that the gift does not end when you hand over the keys. Properly transferring the title and making sure the new owner has insurance and registration can help prevent unnecessary problems down the road.”
Before transferring ownership, make sure you have the vehicle’s title and that you are legally able to transfer it.
If there is an outstanding lien on the vehicle, the lienholder may have an interest in the vehicle. Indiana requires lienholders to release their interest before certain title transactions can be completed.
If you own the vehicle outright but have lost the title, you can apply for a duplicate title through the Indiana Bureau of Motor Vehicles. The current fee for an issue, duplicate, or replacement title is $15.
Indiana also began offering electronic vehicle titles in 2025, so some vehicle owners may have an electronic title rather than a traditional paper title.
When transferring ownership, the current owner and the person receiving the vehicle must properly complete the applicable portions of the certificate of title.
The seller must complete information including the purchaser’s information, date of sale, purchase price, and odometer disclosure, and all vehicle owners must sign the seller section.
Because the vehicle is being given as a gift rather than sold for money, the parties should accurately identify the transaction as a gift and complete any documentation required by the Indiana BMV.
The recipient is responsible for obtaining a new certificate of title, registration, and license plate. Indiana law requires the new owner to apply for a certificate of title within 45 days after the vehicle is purchased or otherwise acquired. A late application can result in an administrative penalty.
The current BMV fee chart lists a $15 title fee and a $30 administrative penalty for a late title application. Additional registration and other vehicle-related fees may also apply.
If you want to purchase a vehicle for someone else, you have several options.
You may purchase the vehicle outright and then transfer ownership to the recipient. You could also give the person money toward a down payment and allow them to obtain financing in their own name.
If financing is involved, carefully consider whose name will be on the loan and whose name will be on the title. Co-signing a loan can create financial obligations for the co-signer if the borrower does not make the payments.
If you are unsure about the best way to structure the purchase and transfer, consider speaking with an attorney before completing the transaction.
Yes, but the process may be different if the recipient lives outside Indiana.
Vehicle title, registration, insurance, and tax requirements are generally determined by the state where the vehicle will be titled and registered. If you are giving a vehicle to someone who lives in another state, check the requirements of that state’s motor vehicle agency before completing the transfer.
The recipient may also need additional documentation, such as a vehicle inspection or proof of ownership, depending on the state.
The recipient should obtain the appropriate insurance before driving the vehicle.
Insurance requirements vary, but simply receiving a vehicle as a gift does not eliminate the recipient’s obligation to comply with state insurance and registration laws.
Before handing over the keys, make sure the recipient understands what is required to legally operate the vehicle.
There are two separate tax issues to consider: vehicle sales/use taxes and federal gift taxes.
Indiana generally imposes sales tax on taxable retail transactions involving motor vehicles. Whether tax is due in a particular vehicle transfer can depend on the circumstances of the transaction, so it is important not to assume that every vehicle gifted between individuals is automatically exempt from tax.
Federal gift-tax rules are separate from Indiana vehicle taxes.
For 2026, the federal annual gift-tax exclusion is $19,000 per recipient. This does not mean that a person automatically owes gift tax simply because a vehicle is worth more than $19,000. Rather, gifts above the annual exclusion may trigger federal gift-tax reporting requirements, while the federal lifetime basic exclusion amount is much higher. For 2026, the lifetime basic exclusion amount is $15 million.
If you are giving someone a particularly valuable vehicle or making other substantial gifts during the year, you may want to consult a tax professional regarding whether a federal gift-tax return is required.
Generally, you cannot claim a charitable tax deduction simply because you give your vehicle to a friend or family member.
Different rules can apply when a vehicle is donated to a qualifying charitable organization. If you are considering donating a vehicle to charity instead of giving it to an individual, consult a tax professional regarding the requirements for claiming a charitable deduction.
The recipient may be responsible for title, registration, license plate, excise tax, and other applicable fees.
Indiana’s current BMV fee schedule lists the title fee at $15. A $30 administrative penalty may apply when a title application is filed late.
The exact amount the recipient will pay can depend on the vehicle and the registration transaction.
After the transfer, the recipient should promptly take care of the title and registration requirements and obtain appropriate insurance.
The previous owner should also make sure the vehicle and license plate are handled properly. Indiana’s BMV advises sellers to remove the license plate from a vehicle at the time of the transaction.
Keeping documentation showing when and how ownership was transferred can also be helpful if questions arise later.
If you have questions about gifting a vehicle, transferring a title, or what to do after a vehicle-related accident, an experienced Indiana attorney may be able to help.
If someone you love has been injured in a car accident, the car accident attorneys at Fleschner, Stark, Tanoos & Newlin want to help. We offer free consultations for people who have been injured in car accidents that were not their fault, including collisions involving trucks, motorcycles, and public transportation.
If you decide to hire us, you pay us nothing unless we recover money for your injuries.
Contact Fleschner, Stark, Tanoos & Newlin today to learn how we may be able to help.
Fleschner, Stark, Tanoos & Newlin
N/a
The financial burden that often comes with a serious injury can be too much for many people to bear. Unexpected medical debt, damaged personal property, and the sudden loss of income can impact the budgets of most families. The good news is that a successful injury claim could help reduce that financial strain after a serious accident. Get in touch with a Terre Haute personal injury lawyer with Fleschner, Stark, Tanoos & Newlin to learn more.
Copyright ©2026 Fleschner, Stark, Tanoos & Newlin,
