How to Assign a Car Title to a Teen

For most teens, reaching the legal driving age is a huge milestone in their lives. Probably long before your teen actually passes the driving test, he's dreamed of the car he wants to get. If you give a vehicle to your teen to use, you can assign the car title over to him. Title transfers are fairly straightforward; however, your state may have laws regarding teens owning property that impact this process.

Contact the DMV

Individual state laws govern title transfers, so the specific process varies slightly between states. The minimum age to own a vehicle varies by state as well. There's a possibility a teen can't own a vehicle as an individual until he reaches the age of 18, or parental consent is required to transfer ownership. Contact your local Department of Motor Vehicles for instructions. The department can also provide information regarding any fees associated with the transfer.

Review the Title

The title to your car is a physical certificate or document that you sign over to the teen. You must own the car outright to successfully transfer ownership. If you still owe money on the loan, you can't simply transfer the title. If your title still lists a lien holder even though your loan is paid in full, you must request a notarized lien release from the lender.

Sign the Title

Use the form on the back of the title to sell or transfer ownership. It states all of the information to enter into each area. You must provide the teen's full name and address, for example. Additionally, you will likely fill in the car's VIN number, odometer reading and sale's price. If you are giving the car to the teen as a gift, you can enter an arbitrary amount such a $1, or the word "gift" on that line. Once you have completed the form entirely, both you and the teen need to sign. Your state may require the signatures to be notarized.

Tax Considerations

Like the other components of the title transfer process, taxation is also state-specific. States commonly impose a tax on cars that are given as gifts. However, some states, such as California, offer an exemption for transfers made between family members. If your state offers an exemption, you'll need to complete the required paperwork or forms. The federal government imposes a gift tax on the donor, unless you're giving to a charity. At the time of publication, the yearly exemption amount was $14,000. Check with the IRS for current amounts.